Chrysler Fiat 500

J.Lo TV spot seems to give Fiat 500 a boost

2011-09-30T09:55:00.000-07:00

Olivier Francois, global chief creative officer for Fiat and Chrysler, defended the decision to place J.Lo on football games in a recent interview with Advertising Age, a sibling publication of Automotive News: "America is aware that there is a car. We needed that kind of spark."

Read more: http://www.autonews.com/article/20110928/BLOG06/110929893/1306#ixzz1ZSJn8wRxJ.Lo

'via Blog this'

Fiat reaps early windfall as 500 buyers snap up pricier options

2011-08-05T08:29:00.001-07:00

Fiat is getting a revenue boost from American buyers choosing pricier packages and customized options on the 500 subcompact. The 500 marks the Italian automaker's return to the U.S. market after a 28-year absence.Fiat reaps early windfall as 500 buyers snap up pricier options

Fiat 500 First Edition: For China Only

2011-07-18T07:23:00.000-07:00

Fiat is marketing 100 numbered units of the 500 minicompact, with special graphics created by five young Chinese designers.Fiat 500 First Edition: For China Only

2012 Fiat Cabrio Priced at $20,000

2011-04-26T02:53:00.000-07:00

Fiat News-The 2012 Fiat Cabrio will start at $20,000, including a $500 destination charge, when it goes on sale in the U.S. later this spring.2012 Fiat Cabrio Priced at $20,000

Fiat to bring 500 to Auto Shanghai 2011

2011-04-18T06:53:00.000-07:00

Fiat 500 News-Fiat will be showcasing the normal unlimited version of its Nuova 500 at Auto Shanghai 2011 at the end of this month, Xinhua reported earlier this week. ...More

Chrysler gives sneak peek at Fiat 500 convertible

2011-04-14T14:07:00.000-07:00

Chrysler Group LLC has released the first pictures and details of the Fiat 500 Cabrio today in advance of next week's New York auto show where the public can kick the tiny tires.
The new 2012 500c is the droptop version of the four-passenger car from partner Fiat SpA that Chrysler now builds at a plant in Mexico for sale in North America....More

Fiat 500 Arrives in Canada

2011-03-19T14:56:00.000-07:00

After 27 year of absence from the Canadian market, Fiat is making what it hopes to be a memorable comeback. As it happened in the neighboring US, the first Fiat model to sell in Canada is the tiny 500, a small city car that seems to have captured the imagination of the Canadian consumers..

More

Fiat 500 Pink Passion

2011-03-09T05:15:00.000-08:00

What a cool concept painted by Artist Jason Travis, " Pink Passion, "Travis says the Fiat 500 embodies the passion for driving, great design and functionality. Usually small cars lack style and elegant design, it looks like a blast to drive! "

Inspired by the passion for driving. Pink flames, pink wheels, abstract graphic designed heart on the door.

You can see more of Artist Jason Travis's work at -Think Art Go----ThinkArtGo.com

Fiat 500 Abarth Coming To USA--Can't Wait!

2011-03-09T04:53:00.000-08:00

Fiat 500 to the USA, we finally have a hot Italian hatchback to compete with the likes of the Mini Cooper and Volkswagen GTI. With the base 500 set to go on sale in dealerships in March, the Abarth version is sure to be coming soon. Learn more about what makes the Fiat 500 Abarth such an exciting car!...More

SERGIO MARCHIONNE, "Fiat 500 Production Celebration," Los Pinos Residence, Mexico City

2011-03-08T08:43:00.000-08:00

It is truly a privilege for me to bring you greetings on the behalf of both Chrysler Group and Fiat on a day of celebration for both our companies.

I would like to thank in particular President Calderon for doing us the honor of inviting us to Los Pinos. It makes today even that much more special.

Mr. President… you may recall that just over a year ago I promised you that I would come back to celebrate the launch of the Fiat 500.

And so it is with great pleasure that, today, I keep that promise...More

Fiat 500 Celebration Challenge Contest

2011-03-08T08:41:00.000-08:00

Chrysler Group LLC employees are always encouraged to be passionate about achieving, embrace and cherish competition, and express their creativity – most recently in a company-wide, Fiat 500-inspired design contest. Corporate teams representing more than 80 departments and business centers in North America embraced the FIAT brand’s values of creativity, personalization and self-expression by creating their own works of art — exemplifying what the “Life is best when driven by Celebration” Team Challenge meant to them.

Chrysler Media--Site

Fiat 500 Celebration Challenge

2011-02-25T16:30:00.000-08:00

Chrysler's Fiat brand challenged the work force to express themselves in the Fiat 500 Celebration Challenge. There were 85 canvases returned and Detroit area Warren Truck Plant (home of the Ram Truck) is in the Top five!
The top five are now on facebook to let the world vote on them.

Please take a minute and vote on Facebook for Warren Truck's artwork in the Fiat 500 Challenge contest!

" Like " This picture on FiatUSA Facebook site---Page

Fiat, Gucci Collaborate on Special Edition of Fiat 500

2011-02-25T16:28:00.000-08:00

Iconic Italian brands Fiat and Gucci have collaborated on a special edition of the Fiat 500, dubbed 500 by Gucci. Available in black or white, the vehicle sports distinctive Gucci style features including the interlocking GG logo and signature stripes.Fiat, Gucci Collaborate on Special Edition of Fiat 500

Fiat 500 speeding to market-Life Is Best When Driven By Celebration

2011-01-26T06:12:00.000-08:00

The rush to reintroduce Fiat to North America means cars will be ready for delivery before new dealerships are open for business, forcing some creative steps to ensure the brand has a positive return to the market....More

Chrysler To Live-Stream L.A. Auto Show Unveilings new Fiat 500

2010-11-12T07:56:00.000-08:00

The new Fiat 500,2011 Dodge Charger R/T and about a half dozen other vehicles, either all-new or refreshed, will be on display at Chrysler's 2010 Los Angeles Auto Show stand, and they'll all be unveiled both live at the show and live, via webcast, on the Internet....More

2011 Fiat 500 Sport for the U.S.

2010-09-17T03:16:00.001-07:00

Dealers begin taking orders later this year; new 500C convertible follows in the spring.More

North American Fiat 500 to be unveiled at LA Auto Show

2010-08-18T06:32:00.000-07:00

Gualberto Ranieri, Chrysler Group LLC Senior Vice President Communications, has announced the North American version of the Fiat 500 will be unveiled at the 2010 LA Auto Show, held November 19-28th.

2011 Fiat 500 Blackjack in the Cards for Europe Market

2010-07-23T05:48:00.001-07:00

A special matte black edition of the Fiat 500 will be available in Europe come September.---...More

Chrysler to enter electric race with Fiat 500

2010-03-23T13:02:00.000-07:00

Chrysler Group LLC will enter the electric vehicle market with the Fiat 500 -- engineered in Auburn Hills and likely built in Mexico.
The 500EV will go on sale in North America in 2012 -- slightly behind some of its competitors.
While Chrysler said in November that it planned to introduce an electric vehicle in 2012, it had envisioned a commercial vehicle. A Fiat Doblo electric commercial van is still in the works -- but after the 500EV....More

Fiat 500C Abarth: 2010 Geneva Auto Show

2010-02-26T07:37:00.001-08:00

TURIN, Italy — Fiat's Abarth brand will display performance editions of the 500C and the Punto Evo at the 2010 Geneva Auto Show.

Abarth has kitted out the 500C in a choice of two-tone exterior paint schemes, loud graphics and 17-inch diamond-finish alloy wheels.

Under the hood is an Abarth-tuned 1.4-liter four-cylinder Turbo T-Jet gas engine that makes 140 horsepower and 152 pound-feet of torque. Coupled with a six-speed Abarth Competizione automated manual gearbox with paddle shifters, the engine provides 0-60-mph acceleration in less than 8.1 seconds and a top speed of 127 mph, while returning impressive average fuel economy of 36 mpg in the European combined driving cycle....More

2011 Fiat 500 Chicago Auto Show

2010-02-04T11:16:00.000-08:00

2011 FIAT 500: As part of Chrysler Group’s recovery plans in the United States, the 2011 Fiat 500 will be sold by its dealers later this year. The subcompact will be the first of several Fiat products to be sold here. The new 500 will be modified for this market, built in Mexico with 1.4 liter 4-cylinder engines built in Michigan.

The original 500, popular in Europe after World War II, was a rear engine car. This time around the 500 gets front engine and can, more or less, be compared to the Mini in configuration and size. Shown at the Chicago Auto Show will be a two-door hatchback.

Future plans may expand the range to include a convertible and other models possible. Early offerings are expected to have a 97-hp output and a 6-speed manual transmission. As we near introduction time, specs will be finalized.

Chrysler To Unveil The 500 and Electric 500 at Detroit Auto Show

2009-12-28T04:51:00.000-08:00

Bloomberg is reporting information gleaned from anonymous sources that Chrysler will be unveiling an electric version of the Fiat 500 at the Detroit Auto Show next month.

,Fiat CEO Sergio Marchionne was quoted as saying his company plans to sell over 50,000 electric vehicles per year by 2014.

The 500 is already a popular subcompact car in Europe, and a gas version is expected to go on sale in the US next year.

Fiat 500 to test Chrysler

2009-08-24T08:13:00.001-07:00

Chrysler Canada Inc. plans to begin selling the Fiat 500 subcompact in early 2011, providing an early test of how the alliance between the two auto makers will address the most glaring problem at the No. 3 Detroit company: the collapse in sales of its passenger cars.

The Fiat 500 is crucial for Chrysler Canada because of the particularly deep slide in passenger car sales that has afflicted all three of the Detroit auto makers here. As of the end of July, Chrysler, Ford Motor Co. and General Motors of Canada Ltd. delivered just 25 per cent of the passenger cars sold in Canada, a staggering drop from the 50-per-cent market share they held in 2000.
Fiat 500 to test Chrysler - The Globe and Mail

Shared via AddThis

Chrysler to make Fiat in Mexico: report Wall Street Journal

2009-08-17T07:24:00.000-07:00

NEW YORK (Reuters) - Chrysler Group is planning to produce Fiat SpA's (FIA.MI) Fiat 500 subcompact at a Chrysler plant in Mexico, the Wall Street Journal reported, citing people familiar with the matter.
Chrysler is also considering what other Fiat models to introduce to the U.S. market, under directions from its Italian partner, the paper reported on its website on Sunday.

Plans also include making a small Fiat engine for the 500 at a Chrysler plant in Trenton, Michigan, and building a Fiat-derived compact car slightly larger than the 500 in the United States, a source told the paper.

The Toluca, Mexico plant, which currently makes the Dodge Journey crossover and PT Cruiser, is an attractive home for the 500 because cars could be exported to South and Central America where the Fiat brand is popular, the Journal reported.

Fiat acquired a 20 percent stake in Chrysler and entered into agreements to give it access to Fiat technology and platforms. Chrysler filed for bankruptcy in April.

Chrysler representatives were not immediately available for comment

Top Gear Fiat 500 Abarth SS

2009-08-04T12:38:00.001-07:00

Fiat 500 Vs. A Porsche Race Video

2009-08-04T12:37:00.001-07:00

Fiat 500 Smokes A Porsche
Watch the little Fiat 500 race and destory the Porsche!Not even close!

Fiat 500 Vs. A Nissan Z350 Race Video

2009-08-04T12:34:00.000-07:00

Fiat 500 Smokes A Nissan Z350
Watch the little Fiat 500 race and destory the Nissan Z350

Magna plans factory at former Chrysler site

2009-07-21T06:43:00.000-07:00

The Detroit News
Highland Park -- The site of the former Chrysler Corp. headquarters could soon be revived with a new automotive components plant.

Officials from Magna International Inc., North America's largest auto supplier, are scheduled to appear today before the Michigan Economic Growth Authority to secure tax incentives for an automotive seating facility at the site, officials confirmed Monday.

Plans are still pending approval from the state and officials, but the plant could create about 400 jobs, said Dennis Niemiec, a spokesman for Wayne County Executive Robert Ficano, who helped develop the deal.

"Mr. Ficano has been working a long time trying to get an auto facility in Wayne County," Niemiec said.

Niemiec said Ficano had been working with Magna International officials for at least the last five years to pursue a possible venture.

Representatives for Magna International, which is based in Aurora, Ontario, and has offices in Troy as well as operations in about 25 countries, could not be immediately reached for comment Monday night.

A number of projects were examined but an automotive plant "was always in the discussion," Niemiec said.

In 2005, officials approved a horse racing license requested by Toronto-based Magna Entertainment Corp., which is at least partly funded by rents and fees from Magna International plants.

Magna had proposed a $100 million, Las Vegas-style entertainment complex on 212 acres at Interstate 94 and Vining near Detroit Metropolitan Airport that was to create 1,000 jobs
....More

Chrysler Fiat Production Of The 500 At Warren Truck or Belvidere?

2009-07-21T06:41:00.000-07:00

Chrysler Fiat is not giving up any information after Channel 4 Detroit announced that Fiat was considering building the Fiat 500 at the Warren Truck Assembly Plant. Which WTAP currently makes the Dodge Ram/Dakota and was slated to build the Rambox option that came from St. Louis. If Chrysler is to launch the 500 by 2011 they must make a decision soon.
The Belvidere Plant builds the Dodge Caliber which is still going to build the 2010 model.
There are a few good questions,which plant will lose their current production model? will Fiat build a new plant? or will production go to Mexico?

Channel 4 Fiat 500 Report--Video

Meet the Dodge/Fiat 500

2009-07-15T08:48:00.000-07:00

Here are some pics and stats of the super small car that is selling like crazy in Europe.The Fiat 500. Which would be rebadged to the Dodge 500 or maybe the Dodge Hornet???

To Shrink a U.S. Car, Chrysler Goes to Poland

2009-07-15T08:44:00.000-07:00

To Shrink a U.S. Car, Chrysler Goes to Poland

TYCHY, Poland — For decades, automakers looking for the secret to small-car success would journey to Toyota City in Japan. These days, they are coming to Tychy.

Since Fiat effectively took over Chrysler this year, engineers from Detroit have been making monthly pilgrimages here to see something they can only envy: an auto plant that is hiring workers and earning a profit.

The mammoth Fiat plant here, which churned out nearly half a million cars last year, may hold some of the answers for Chrysler (as well as Ford Motor and General Motors), as it struggles to regain its footing after its bankruptcy and reduce its dependence on muscle-bound trucks and sport utility vehicles.

For those who remember Fiat before its ignominious retreat from the American market — the name was said to stand for “Fix It Again, Tony” — the Italian automaker may seem an unlikely role model. It left the United States in the early 1980s after widespread quality problems.

But Fiat itself has undergone a revolution under Sergio Marchionne, who became its chief executive in 2004, raising standards for quality and reliability at plants like Tychy and mastering the art of building smaller cars with high efficiency. Chrysler hopes he can do the same thing for it now that he has assumed control of the American company.

“We are lucky there is a crisis,” said the director of the Tychy plant, Zdzislaw Arlet, unable to resist a gibe at the bigger cars and trucks that have traditionally stolen the industry spotlight. “Everybody wants to build small cars now.”

At Tychy (pronounced TICK-ee), one secret is flexibility: The latest robotic technology is balanced by workers who can quickly shift models to match demand. That is one reason Tychy is operating around the clock, six days a week, while most other auto plants in Europe and the United States are running at a fraction of capacity, increasing costly nonproductive downtime.

Indeed, for visiting Chrysler engineers, going to Tychy is akin to an aging heavyweight boxer stepping into a gym where more agile bantamweight fighters train.

Chrysler’s smallest car, the Dodge Caliber compact, is one-third heavier (about 1,000 pounds) than the fast-selling Fiat 500, which is made exclusively at Tychy.

Fiat executives say their goal is not only to produce subcompact European models at Chrysler’s North American plants — but also for Chrysler managers to learn how to speed the introduction of smaller cars in the United States that Americans will want to buy, like a new version of the Sebring, while increasing efficiency the way Fiat has at Tychy.

Chrysler’s offerings, unlike those from Fiat, have long been dominated by Jeeps and S.U.V.’s and big trucks like the Dodge Ram, with cars making up just 30 percent of Chrysler’s worldwide sales last year. As bigger vehicles fell out of favor because of high gasoline prices and the recession, Chrysler’s overall sales dived, falling 44 percent in the first half of 2009 compared with the period a year earlier.

“It’s very difficult to go from big to small, but they are here to compare and learn,” Mr. Arlet said as he walked amid the sparks thrown off by robots along his production lines. “This plant was designed to produce small cars.”

The ideal combination of automated robots and individual workers has been critical to Tychy’s success, said Ron Harbour, an American industry consultant with Oliver Wyman, a consulting firm. Success is not as simple as the more robots, the better.

“With people, you can change the mix in one day or one week,” Mr. Harbour said, referring to the models a production line churns out. “You can’t do that with robots.”

The Tychy plant employs about 5,000 people, including about 1,700 hired last year to make more Fiats, as well as the Ford Ka.

Tychy’s huge scale — it covers more than 4.3 million square feet — also works to its advantage.

Although exact benchmarks are difficult, Mr. Harbour mentions Chrysler’s plant in Belvidere, Ill., as a comparable site, since it produces smaller cars. But its annual production capacity of 265,000 is just over half of the plant at Tychy.

Mr. Arlet is also constantly on the lookout for time- and money-saving improvements, adding that he himself looks to Toyota’s famous Kaizen system for inspiration: Instead of filling up cars at different production points with brake fluid, gasoline, water and other liquids, one machine on each of Tychy’s three lines fills each vehicle.

“A car comes off the assembly line every 55 seconds,” Mr. Arlet said. “In 1996, it took twice as long.”

Along with the new technology came a new focus on quality. About three years ago, workers were assigned an individual identification number that is stamped on whatever sections of the car they assemble so any problems at the end of the line can be traced to the source.

As a result, Mr. Arlet said, the number of cars coming off the line with defects has fallen from 20 percent in 1996 to just 4 percent now — a figure Mr. Harbour said compared favorably to factories in the United States or Western Europe.

“At the moment, Tychy is the best of Fiat as far as quality is concerned,” said Giuseppe Volpato, a professor of economics at the University of Venice who has long studied the company. “I think Poland is becoming the reference point for the whole organization, even in Italy.”

For Mr. Marchionne, turning around Chrysler will probably be harder than getting Fiat back on track. Chrysler not only relies on trucks and S.U.V.’s, it derives 75 percent of its sales from the now-moribund American market.

At the same time, Chrysler is facing increased pressure from Ford, as well as G.M., which emerged from bankruptcy last week. And of course, the original high-quality, small-car brands, like Toyota and Honda, remain fierce competitors, even if Toyota is suffering great losses of its own.

Partly because of the need to move quickly, the pace of cultural exchanges like the visits to Tychy has quickened since Chrysler emerged from bankruptcy on June 10. Fiat took a 20 percent stake in return for technology and know-how that the Italian automaker says is worth $10 billion in lieu of any cash.

Not only engineers and line managers are heading to Europe for the grand tour — so is the top brass.

Late last month, the executives responsible for Chrysler’s three brands, along with the heads of manufacturing, engineering and styling, traveled to a proving ground halfway between Milan and Turin for a weekend of meetings and motoring with their Italian counterparts.

Back in Tychy, Mr. Arlet seemed amazed at the tectonic shift under way in the global auto industry, with Americans coming to Poland in search of the secrets of carmaking, rather than the other way around.

With a confident smile, he declared, “I am looking forward to when the Fiat 500 is made in the U.S.A. and also made here, and we can compare.”

Chrysler sale to Fiat appealed To The Supreme Court

2009-06-08T05:43:00.000-07:00

Indiana pension funds group asks Supreme Court to block deal

David Shepardson / Detroit News Washington Bureau

Washington -- Lawyers for a group of Indiana pension funds have filed a long-shot emergency appeal with the U.S. Supreme Court seeking to block a deal that would allow Chrysler LLC's emergence from bankruptcy, which could come as early as today.

The appeal came a day after a three-judge panel of the U.S. Court of Appeals in New York approved the sale of Chrysler's "good" assets from bankruptcy to form a new company, Chrysler Group LLC. That firm will be majority owned by a United Auto Workers' health care trust fund. Fiat SpA, which will own 20 percent, will be able to acquire another 15 percent of Chrysler by meeting three benchmarks and will not have to put up any money for its stake. Fiat's CEO Sergio Marchionne will be CEO of Chrysler as well.

In a 39-page appeal filed before midnight Saturday, lawyers for the pension funds wrote: "The negative economic consequences of permitting an unlawful sale to proceed may well over time dramatically outweigh Chrysler's short-term harm. The public is watching and needs to see that, particularly when the system is under stress, the rule of law will be honored and an independent judiciary will properly scrutinize the actions of the massively powerful executive branch."

The petition was referred to Justice Ruth Bader Ginsburg, who handles emergency appeals for the 2nd Circuit. She can rule on the matter herself or refer it to the entire Supreme Court. Five of the nine justices would need to vote to hear the appeal and extend a stay blocking Chrysler's sale. By late Sunday evening, the court had not yet ruled.

The Indiana funds hold $100 million of Chrysler's $6.9 billion in secured debt. The funds cover about 100,000 workers and retirees in Indiana.

The U.S. Appeals Court on Friday upheld a May 31 bankruptcy court ruling clearing the way for the sale of most of Chrysler's assets to a group including Fiat and the UAW's health care trust fund. The UAW fund will hold a 55 percent stake, while the U.S. and Canadian governments will hold 10 percent. Fiat has the right to withdraw from the deal if Chrysler hasn't exited bankruptcy by June 15.

The appeals court gave creditors until 4 p.m. today to convince the Supreme Court to hear the case. If not, Chrysler could close on its sale soon afterward.

Much of the Indiana pension funds' arguments against the sale rely on internal e-mails between Chrysler and members of the Obama auto task force, which showed the overarching role of the government in pushing Chrysler into bankruptcy and directing the carmaker's actions ahead of the filing.

Legal experts said the creditors have a high hurdle to vault, since the High Court accepts just a fraction of the cases it receives -- and even fewer emergency cases for review.

But the case would represent the first time the court could rule on the legality of the $700 billion Troubled Asset Relief Program, the Wall Street bailout fund that Congress approved last fall. The creditors have challenged the use of the funds for automakers.

The Treasury Department agreed to pay off secured creditors of Chrysler with $2 billion in cash for $6.9 billion in debt -- or about 29 cents on the dollar.

The Indiana funds purchased the debt at an average price of 43 cents on the dollar -- meaning they would lose roughly $13 million on their $42 million investment.

Dealers Fight Chrysler Franchise Cuts in Court

2009-06-05T06:06:00.000-07:00

NEW YORK, June 4 -- Eldon Palmer was preparing for a grand opening of his upgraded Chrysler dealership -- a $3.2 million project he pursued at the automaker's urging -- when the letter came.

In formal language that seemed to belie their 52-year business relationship, Chrysler informed Palmer that his Indiana dealership, along with another he runs, would be among the 789 dropped as the automaker seeks to emerge from bankruptcy as a new leaner, healthier company.

"We were ready to roll," said Palmer, recounting the millions he has spent over the past two years expanding his Chrysler brands and putting them under one roof in a new facility. He had done so, Palmer added, at the request of Chrysler, which was trying to establish a more efficient dealership network.

One after another, Chrysler dealers slated for closure took the witness stand Thursday in a federal bankruptcy courthouse in Lower Manhattan. Some openly wept.

Chrysler, which plans to emerge from bankruptcy as a new company led by Italian automaker Fiat, is seeking court approval to terminate agreements with roughly a quarter of its dealerships. Thursday's hearing is to be followed by oral arguments Tuesday, after which U.S. Bankruptcy Judge Arthur J. Gonzalez will rule.

Chrysler executives have said that whittling down a bloated dealer network was necessary to be more competitive with foreign manufacturers. The executives said the company used business criteria such as sales productivity and customer service satisfaction to determine which dealers to cut. Chrysler also wants to bring its three product lines -- Chrysler, Dodge and Jeep -- under one dealership roof.

During cross-examination by a Chrysler attorney, Palmer acknowledged that his dealership met a mere 37 percent of its sales target for 2008. "It was embarrassing," Palmer said, in part blaming the poor showing on the condition of the building he purchased, which he has since renovated. "It is a beautiful facility now.

Larry Crain, a dealer in Little Rock, told a similar story, saying he invested in expanding his product offering at the encouragement of Chrysler. And like many others, Robert Melvin, a Nevada dealer, testified that he bought more cars from the company in recent months at the request of executives as Chrysler, faced with plunging sales, tottered on the brink of bankruptcy with insufficient cash flow.

He received a rejection letter last month. To his dismay, Melvin added, he received a shipment of more cars from Chrysler last week.

Despite the dealers' pleas, bankruptcy experts said the dealers have an uphill legal battle. In bankruptcy proceedings, companies have more leverage to ignore state franchise laws that protect dealers. And even if the dealers succeed in preserving their dealership agreements, the nature of the Chrysler case complicates the dealers' battle.

Chrysler is seeking to sell most of its assets to a new company led by Fiat, but the dealer contracts are with the "old" Chrysler that is being liquidated.

"It's a long shot," said Scott Van Meter, managing director of LECG, a consulting firm.

Furthermore, in an opinion approving the sale this week, Judge Gonzalez noted that the underlying argument of many opposing the transaction is the desire to have the government protect every stakeholder from economic loss -- not just those that the government perceives as being essential to the survival of a successful new Chrysler.

"For example, any dealership rejection that is approved will cause hardship to the particular dealership involved but may well be necessary if New Chrysler is to survive," Gonzalez wrote.

Judge Approves Chrysler Fiat Deal

2009-06-01T05:22:00.000-07:00

A bankruptcy judge approved the sale of substantially
all of U.S. automaker Chrysler's assets to a group led by
Italy's Fiat SpA(FIA.MI) in an opinion filed late on Sunday. Chrysler's bankruptcy, also financed by the U.S. Treasury,
has been widely seen as a test run for the much bigger and more
complex reorganization of GM. The GM plan as detailed by U.S. officials is for a quick
sale process that would allow a much smaller GM to emerge from
court protection in as little as 60 to 90 days. "Now the hard part begins, which is making GM and Chrysler
competitive.

Chrysler Owes $400 Million To Suppliers and Bob Lutz Joins List

2009-05-11T11:08:00.000-07:00

Some surprising companies and people stand in a long line of those with unsecured claims against bankrupt Chrysler.

The list of creditors that are owed big money by bankrupt Chrysler includes many suppliers such as Johnson Controls and Visteon. But there’s also Bob Lutz, a former vice chairman and president of Chrysler, where he worked for 12 years starting in 1986, whose compensation ran in the millions of dollars annually. A claim of an undisclosed amount will be filed and ruled on by the court in the coming weeks. See the top 10 list of creditors filing claims with Chrysler.

Chrysler Top Ten Creditors

Ohio Module Mfg. Co. -- $70,337,248
BBDO Detroit Inc. -- $58,055,133
Johnson Controls Inc. -- $50,312,511
Continental Automotive -- $46,995,802
Cummins Engine Company -- $43,912,930
Germersheim Spare Parts -- $36,231,566
Comau Inc. -- $32,069,462
Visteon Corp. -- $25,608,790
New Process Gear -- $19,636,149
Denso International -- $18,704,831

Chrysler-Fiat Will become A Global Powerhouse

2009-05-07T03:42:00.000-07:00

J. Travis-Gm Chrysler News

As Fiat SpA CEO Sergio Marchionne is in the process of wrapping up the Fiat Chrysler deal, he is also working on purchasing GM Operations overseas, Saab, Opel(Saturn) and building a global network quickly.

If Fiat is going after GM-Opel operations, it may target some of GM's domestic brands like Saturn and Pontiac.Because the Opel vehicles and Saturn vehicles are on the same platform....?

The new Chrysler-Fiat line up of vehicle brands could be quit impressive:
Alfa Romeo,Fiat,Ferrari,Maserati,Jeep,Chrysler,Dodge,Saab,Opel(Saturn),Joint ventures with Kia,Mitsubishi,TaTa and Nissan.

By time the smoke clears Chrysler-Fiat will be larger than GM and only second in the World to Toyota! Which they could easily surpass Toyota if the auto markets pick up around the world.

I would guess Sergio believes in go big or go home.....

Chrysler expected to sell assets to Fiat

2009-05-02T04:37:00.000-07:00

NEW YORK – Chrysler LLC is expected to file a motion Saturday to sell substantially all of its assets to Italian automaker Fiat Group SpA, but the ailing automaker must still deal with creditors who refused to come to a deal to erase the company's debt.

Attorneys for Chrysler say eight plants will not be affected by the sale, including five that the automaker revealed it will shutter by the end of next year.

While Chrysler faced its first hearing Friday in Manhattan bankruptcy court, court documents showed the Big Three automaker planned to close plants in Michigan, Missouri, Ohio and Wisconsin that employ about 4,800 people. Chrysler said they will be offered jobs at other plants.

The company also announced President and Vice Chairman Tom LaSorda is retiring effective immediately.

Judge Arthur Gonzalez approved a series of motions at Friday's hearing, launching a chain of events designed to ensure Chrysler's bankruptcy process is the quick and "surgical" one the company and the U.S. government have promised.

But what could prove to be the case's biggest challenge still lies ahead. Chrysler must eventually deal with creditors who defied government pressure to wipe out the automaker's debt and might have helped the company avoid a bankruptcy filing in the first place.

Another hearing was scheduled for Monday, where Chrysler attorneys will ask Gonzalez to let the company start using $4.5 billion in loans from the U.S. and Canadian governments to keep operating under bankruptcy protection.

Chrysler, the nation's third-largest car manufacturer, filed for bankruptcy protection Thursday. The company plans to emerge in as little as 30 days as a leaner, more nimble company, with Fiat potentially becoming the majority owner.

In return, the federal government agreed to give Chrysler up to $8 billion in additional financing, on top of the $4 billion the company already has received.

Chrysler attorney Corinne Ball said that lawyers on Monday would ask to set a date for the first hearing on the sale of its assets to the "new Chrysler." In bankruptcy, assets are sold in a two-part process during which the court asks for competing bids. None are expected in Chrysler's case, since documents show the company already tried to form alliances with dozens of companies, including Nissan-Renault, Toyota, Honda, Volkswagen and even rival General Motors Corp.

Heidi Sorvino, bankruptcy partner at Smith, Gambrell & Russell LLP, said a sale could be completed in 30 to 60 days.

"I think the sale will happen quickly," she said. "The actual proceeding is going to take a long time."

Until the deal with Fiat closes, the automaker plans to idle all of its plants in the U.S. Chrysler's Canadian assembly plants also halted production Friday because of parts shortages stemming from the U.S. shutdown.

In court documents, Chrysler said it won't keep its Sterling Heights, Mich., plant that makes Chrysler Sebrings and Dodge Avengers, and the Conner Avenue plant in Detroit that makes Dodge Vipers. The St. Louis North plant that makes Dodge Ram pickups would also close.

Chrysler's Twinsburg, Ohio, parts stamping plant and Kenosha, Wis., engine plant will also be shuttered.

Two other plants that will be left out of the Fiat sale are the St. Louis South plant and an assembly plant in Newark, Del., that were idled last year. Another facility, Chrysler's Detroit Axle plant, is already scheduled to be replaced by a new factory near Port Huron, Mich.

The "new Chrysler" would lease the eight plants, then shutter them by December 2010.

"While some facilities may close, substantially all Chrysler employees will be offered employment with the new company," Chrysler spokeswoman Dianna Gutierrez said. "Employees currently located at a facility identified for disposition will be offered a position at one of the facilities sold to the new company."

Gonzalez approved Chrysler's motion to allow the automaker to pay $48.8 million in employee and contract worker pre-bankruptcy wages, benefits and businesses expenses. The motion also references an estimated $86 million in employee vacation benefits that it may not ultimately have to pay.

The judge also approved Chrysler's motions that will let it continue to honor its warranties and continue its current banking practices.

It's uncertain when Gonzalez will face objections from the creditors that hold $6.9 billion of the automaker's debt.

Four banks holding 70 percent of the debt agreed to a deal that would give the lenders 29 cents on the dollar. But a collection of hedge funds refused to budge, saying the deal was unfair because they deserve to recover more than other creditors like the United Auto Workers.

President Barack Obama on Thursday chastised the funds for seeking an "unjustified taxpayer-funded bailout" after Chrysler and his auto task force cleared the company's other hurdles, including the Fiat deal and a cost-cutting pact that the UAW ratified this week.

Chrysler's bankruptcy filing is the latest step in a drastic reordering of the American auto industry, which has been crushed by higher fuel prices, the recession and customer tastes that are moving away from the gas-guzzling SUVs that were once big money makers.

The government already has sunk about $25 billion in aid into Chrysler and GM.

GM faces its own day of reckoning on June 1, a date the administration has set for it to come up with its own restructuring plan. GM has announced thousands of job cuts, plans to idle factories for weeks this summer and has even offered the federal government a majority stake in the company as it races to meet the deadline.

Like at Chrysler, debt may be the stumbling block. GM has asked its unsecured bondholders to exchange $27 billion of debt for a 10 percent stake in the automaker. The creditors balked, saying that would leave them with just pennies on the dollar and that they deserve a majority stake if they give up their claims.

Chrysler Fiat News-Chrysler is in court today for bankruptcy hearing

2009-05-01T07:09:00.000-07:00

DETROIT – Chrysler's first hearing in a New York courtroom Friday morning may offer the first clue as to whether a quick, "surgical" bankruptcy is possible. The nation's third-largest automaker filed for Chapter 11 bankruptcy protection Thursday with an ambitious plan to emerge in as little as 30 days as a leaner, more nimble company.

After months on government life support, Chrysler is pinning its future on a top-to-bottom reorganization and plans to build cleaner cars through an alliance with Italian automaker Fiat. In return, the federal government agreed to give Chrysler up to $8 billion in additional aid and to back its warranties.

On Friday morning, bankruptcy court Judge Arthur Gonzalez is scheduled to hear the case's first motions, which typically will allow the company to continue paying workers and basic utility costs as it restructures.

Eventually, Gonzalez will have to sort out the key issue that made bankruptcy necessary: the creditors that hold $6.9 billion of the Chrysler's debt.

Four of the largest banks holding 70 percent of the debt agreed this week to a deal that would give them $2 billion. But a collection of hedge funds refused to budge, saying the deal was unfair and would only return a small fraction of their holdings.

President Barack Obama on Thursday chastised the funds for seeking an "unjustified taxpayer-funded bailout" after Chrysler and his auto task force cleared the company's other hurdles. Along with the Fiat deal, Chrysler adopted a cost-cutting pact with the UAW this week.

"They were hoping that everybody else would make sacrifices and they would have to make none," Obama said. "I don't stand with those who held out when everybody else is making sacrifices."

One lender, OppenheimerFunds Inc., said it rejected the government offer because it "unfairly asked our fund shareholders to make financial sacrifices greater than the sacrifices being made by unsecured creditors."

The White House said Chrysler could come out of bankruptcy in 30 to 60 days. Under normal circumstances, it would be difficult to complete such a large bankruptcy so quickly.

But John Pottow, a University of Michigan professor who specializes in bankruptcy, said the government's level of involvement is much greater than in a typical corporate bankruptcy.

"If you have the president of the United States who wants something to happen, I think anything's possible in bankruptcy protection," he said.

In the meantime, Chrysler said it will close all of its plants starting Monday and they will remain closed until the company comes out of bankruptcy. At least three Detroit-area factories sent workers home Thursday after suppliers stopped shipping parts over fears they would not be paid.

"A lot of us are scared," said Steve Grabowski, 33, who has worked at a Warren, Mich., parts stamping plant for seven years and was sent home Thursday. "We knew something like this was going to happen, but we didn't think it would be so soon."

Chrysler CEO Robert Nardelli announced he would step down when the bankruptcy is complete and take a post as an adviser with Cerberus Capital Management LP, which will give up its 80 percent ownership of Chrysler under the automaker's plan. Vice Chairman Tom LaSorda, who once ran the company when it was owned by the German automaker Daimler, said he would retire.

Chrysler's bankruptcy filing is the latest step in a drastic reordering of the American auto industry, which has been crushed by higher fuel prices, the recession and customer tastes that are moving away from the gas-guzzling SUVs that were once big money makers.

The administration has sunk about $25 billion in aid into Chrysler and rival General Motors Corp.

GM faces its own day of reckoning on June 1, a date the administration has set for it to come up with its own restructuring plan. GM has announced thousands of job cuts, plans to idle factories for weeks this summer and has even offered the federal government a majority stake in the company as it races to meet the deadline.

Like at Chrysler, debt may be the stumbling block. GM has asked its unsecured bondholders to exchange $27 billion of debt for a 10 percent stake in the automaker. The creditors balked, saying that would leave them with just pennies on the dollar and that they deserve a majority stake if they give up their claims.

When Chrysler emerges from bankruptcy, the United Auto Workers union will own 55 percent of the automaker and the U.S. government will own 8 percent. The Canadian and Ontario governments, which are also contributing financing, would share a 2 percent stake.

Under the deal, Chrysler would gain access to Fiat's expertise in small, fuel-efficient vehicles. The U.S. automaker eventually wants to build cars that could get up to 40 mpg, far more economical than its current fleet focused on minivans, Jeep SUVs and the Dodge Ram pickup.

In exchange, Fiat would initially get 20 percent of the company, but its share could rise to 35 percent if certain benchmarks are met, and Fiat said Thursday it could get an additional 16 percent by 2016 if Chrysler's U.S. government loans are fully repaid. Fiat would also gain access to the North American market through Chrysler factories and dealerships.

Fiat CEO Sergio Marchionne said he planned to spend time meeting Chrysler's employees and touring its plants over the next few weeks.

He said Fiat was preparing for Chrysler to "re-emerge quickly as a reliable and competitive automaker." Fiat also plans to reintroduce brands like Alfa Romeo in North American markets.

The Fiat deal and bankruptcy cap a disastrous time for Chrysler.

Chrysler lost $8 billion last year and its sales through March were down 46 percent compared with the year-earlier period, leading some auto industry analysts to question whether Chrysler can survive even in bankruptcy.

But company executives told reporters Thursday that Chrysler vehicles with Fiat's fuel-efficient technology should reach showrooms in 18 months.

Vice Chairman Jim Press said Chrysler has cut expenses to operate profitably at a lower sales volume, and he said it would be able to take advantage of Fiat's distribution network to sell more vehicles globally.

Chrysler's LaSorda said in court papers that the automaker started to think about potential alliances as early as fall 2006, when Chrysler was still owned by DaimlerChrysler AG.

In the spring of 2007, LaSorda began negotiations with Nissan-Renault that went through several iterations, and Chrysler also started talks with GM in June 2008. The two companies even studied how much could be saved through a combination, but by November the worsening U.S. economy forced GM to focus on its own liquidity problems.

LaSorda named a number of other carmakers that Chrysler approached, including Toyota Motor Corp., Volkswagen AG, India's Tata Motors, the Hyundai-Kia Automotive Group, Russia's GAZ, Mitsubishi and Honda Motor Co., as well as a number of Chinese automakers. He said it had also approached some suppliers and parts manufacturers.

Despite the turmoil with Chrysler and GM's looming deadline, Obama urged consumers to keep buying cars.

"If you are considering buying a car, I hope it will be an American car," he said.

Stephen Manning reported from Washington. Associated Press writers David N. Goodman in Warren, Mich., Kimberly S. Johnson in Detroit and Vinnee Tong in New York contributed to this report.

Fiat News-Chrysler to file for bankruptcy

2009-04-30T08:51:00.000-07:00

Chrysler to file for bankruptcy

WASHINGTON – Chrysler will file for bankruptcy after talks with a small group of creditors crumbled just a day before a government deadline for the automaker to come up with a restructuring plan, two administration officials said Thursday.

The Obama administration had long hoped to stave off bankruptcy for Chrysler LLC, but it became clear that a holdout group wouldn't budge on proposals to reduce Chrysler's $6.9 billion in secured debt, according to the officials, who spoke on condition of anonymity because the filing plans are not public. Clearing those debts was a needed step for Chrysler restructure by the Thursday night deadline.

Bankruptcy doesn't mean the nation's third largest automaker will shut down. And the privately-held Chrysler is expected to sign a partnership agreement with the Italian company Fiat as early as Thursday as part of its restructuring plan. A Chapter 11 bankruptcy filing would allow a judge to decide how much the company's creditors would get.

President Barack Obama is expected to discuss the nation's auto sector at noon Eastern.

The Treasury Department's auto task force has been racing in the past week to clear the major hurdles that prevented Chrysler from coming up with a viable plan to survive the economic crisis ravaging nation's automakers.

Along with the Fiat deal, the United Auto Workers ratified a cost-cutting pact Wednesday night. Treasury reached a deal earlier this week with four banks that hold the majority of Chrsyler's debt in return for $2 billion in cash.

But the administration said about 40 hedge funds that hold roughly 30 percent of that debt also needed to sign on for the deal to go through. Those creditors said the proposal was unfair and were holding out for a better deal.

"While the administration was willing to give the holdout creditors a final opportunity to do the right thing, the agreement of all other key stakeholders ensured that no hedge fund could have a veto over Chrysler's future success," said one of the administration officials.

A third person briefed on Wednesday night's events said the Treasury Department and the four banks tried to persuade the hedge funds to take a sweetened deal of $2.25 billion in cash. But in the end, this person said most thought they could recover more if Chrysler went into bankruptcy and some of its assets were sold to satisfy creditors. This person asked not to be identified because details of the negotiations have not been made public.

When it files for bankruptcy, Chrysler would continue operating and Fiat would still sign on as a partner on Thursday, the people said. The government already has promised to back Chrysler's warranties in an effort to allay customers' fears that the automaker wouldn't be around to honor them.

President Barack Obama's auto task force in March rejected Chrysler's restructuring plan and gave it 30 days to make another effort, including a tie-up with Fiat. The company has borrowed $4 billion from the federal government and needs billions more to keep operating. President Obama said Wednesday night while the lender talks were still ongoing that he was "very hopeful" that deals can be worked out to keep Chrysler LLC a viable automaker, and more hopeful than he was a month ago that the company will stay in business.

The UAW agreement, which would take effect May 4, meets Treasury requirements for continued loans to Chrysler Corp., and includes commitments from Fiat to manufacture a new small car in one of Chrysler's U.S. facilities and to share key technology with Chrysler.

Meanwhile, the Fiat partnership means Chrysler CEO Robert Nardelli could be out of a job. In an April e-mail to employees, he said that if the deal is completed, Chrysler would be run by a new board appointed by the government and Fiat. The new board, Nardelli wrote, would pick a CEO "with Fiat's concurrence."

Sergio Marchionne, CEO of the Italian automaker, told reporters earlier this month that he could run Chrysler. Obama said Wednesday that Fiat's management "has actually done a good job transforming their industry."

Krisher reported from Detroit. Associated Press Writers Ben Feller in Washington, Colleen Barry in Milan, Italy, Kimberly S. Johnson in Detroit and David Eggert in Lansing, Michigan, contributed to this report.

Chrysler Fiat News-Obama praises autoworkers, says Chrysler deal uncertain

2009-04-29T09:56:00.000-07:00

President Barack Obama said today he did not know whether a deal preventing a collapse of Chrysler LLC would be done before Thursday's deadline, and praised American autoworkers for their sacrifices to the industry's survival.

Speaking at a town hall meeting in Missouri marking his 100th day in office, Obama said his auto task force sent Chrysler and General Motors Corp. back to redo their business plans because their initial sustainability plans were not realistic. GM has until June 1 to deliver its new plan.

As for Chrysler: “We don’t know yet whether the deal is going to get done.”

Chrysler and the administration reached an agreement with large Chrysler debt holders to swap $6.9 billion in secured debt for $2 billion in cash. But 40-odd investment firms and hedge funds have to agree in unison to the swap, or the government will take Chrysler to bankruptcy court to force it into place.

Chrysler must also complete a deal with Fiat S.p.A., which appears close at hand.....More

Chrysler Fiat-U.S. Reaches Deal With Chrysler Banks, Person Says

2009-04-28T09:05:00.000-07:00

By John Hughes

April 28 (Bloomberg) -- The U.S. has reached agreement with banks on terms to reduce debt of Chrysler LLC, according to a person with knowledge of the negotiations.

The banks’ representatives agreed to forgo $6.9 billion in debt in return for $2 billion in cash, said the person, who declined to be identified discussing the private talks. The deal is one of the steps Chrysler needed to avoid a bankruptcy after April 30.

Bankruptcy remains a possibility for Chrysler, the person said. All 46 banks involved need to ratify the terms, and it isn’t likely that all would, the person said. In that case, a quick, surgical type of bankruptcy may be needed to bring any dissenting banks into an agreement, the person said.

Chrysler, operating with $4 billion in U.S. loans, faces an April 30 deadline to restructure its costs or risk losing government support.

Shawn Morgan, a Chrysler spokeswoman, declined to comment.

Chrysler, Fiat Make Progress

2009-04-27T10:24:00.000-07:00

Italian carmaker Fiat took a step closer to clinching a crucial deal with Chrysler after the U.S. carmaker's unions gave their strongest signal yet that they were willing to ratify a tentative deal and Chrysler's chief executive expressed his commitment to qualify for U.S. emergency loans.

Chrysler, which has 8,000 unionized workers in Canada, is under immense pressure to secure a partnership with Fiat after the Obama administration threatened to suspend federal aid for Chrysler unless it secured a deal with the Italian carmaker.

In a first significant step toward meeting the deadline, Chrysler's Canadian and U.S. unions signalled that they were willing to pave the way to an agreement. On Sunday, the Canadian Auto Workers union ratified a new collective agreement with Chrysler to allow layoffs and pay cuts by about C$19 ($15.61) an hour, that would save the automaker about $198.0 million annually, the union said. It also includes the elimination of a third shift at a plant in Ontario, Canada.

Separately, the United Auto Workers union announced that it had also reached a tentative agreement with Chrysler, Fiat and the U.S. government on further concessions on a contract and a healthcare trust agreed with the automaker in 2007.

But while a thumbs-up from unions makes a deal between Chrysler and Fiat more likely, another obstacle is Chrysler's large debt pile. "The bigger unknown at the moment is the banks," said Massimo Vecchio, an analyst with MedioBanca. Lenders to Chrysler are reportedly owed $7.0 billion, but Fiat and the U.S. government are pushing the lenders to forgive $5.5 billion of the debt in exchange for a 5.0% stake in the company, the analyst said.

"It's difficult to say if at the end they will clinch a deal under the current terms. But Fiat will only take Chrysler if Chrysler's debt is negotiated," the analyst said.

Chrysler also signalled its willingness to avoid having to file for bankruptcy protection. The company's chief executive RobertNardelli said that German automaker Daimler was working with Cerberus Capital Management to divest Daimler's 19.9% stake in the struggling U.S. automaker. The top priority was to preserve Chrysler and the entire leadership team was focused on completing the required deals to qualify for emergency U.S. government loans, Nardelli said in a memo obtained by Reuters.

Last week, Sergio Marchionne, Fiat's outspoken chief executive, said that he was confident his company could reach a deal with near-bankrupt Chrysler. "In light of what I know today, I see no reason why it won't happen," Marchionne told reporters in Milan. (See "Can Sergio Marchionne Save Chrysler?")

Still, Fiat could even explore a potential partnership even if Chrysler files for Chapter 11 bankruptcy protection from creditors, a source close to the Italian carmaker told the Associated Press. Chrysler and the U.S. Treasury Department were preparing paperwork for bankruptcy filings, one as a reorganization in Chapter 11 with government funding and the other as a liquidation if no government money is available, sources in the United States have said, the AP reported.

But on Monday Chrysler said it was working "diligently to finalize our alliance with Fiat and restructure our business by the government's April 30 deadline".

UAW focusing on talks with Chrysler

2009-04-16T11:56:00.000-07:00

DETROIT – The United Auto Workers union has placed concession talks with General Motors Corp. on the back burner as it tries to reach a deal with Chrysler LLC before an April 30 government deadline, two people briefed on the negotiations said Thursday.

The decision likely means that any deal with Chrysler will set the pattern for concessions granted to GM as both companies try to show the government they have cut costs enough to get more government loans.

The people, who spoke on condition of anonymity because the talks are private, said the union is focusing on Chrysler because its government deadline to cut labor costs and swap debt for equity is just two weeks away.

Chrysler also has to ink an alliance deal with Fiat Group SpA by April 30 to get more government aid. Without further help, Chrysler likely would be auctioned off in pieces under bankruptcy court supervision.

GM's government deadline is June 1, but the Obama administration said it will provide bankruptcy financing if the company can't successfully restructure outside of court.

GM spokeswoman Sherrie Childers Arb and UAW spokeswoman Christine Moroski would not comment on the negotiations. Chrysler spokeswoman Shawn Morgan would not comment beyond a statement that the company has a goal is to reach a conclusion by April 30.

The Canadian Auto Workers union has said that it plans to resume negotiations with Chrysler on Monday after Fiat CEO Sergio Marchionne said the Italian automaker will walk away from the proposed tie-up unless Chrysler's unions agree to major cost cuts.

Canadian Industry Minister Tony Clement said Thursday that the CAW must make significant concessions to ensure Chrysler survives. Without a deal in the next two weeks, the Canadian government will also shut down its support for the troubled automaker, Clement said.

Chrysler, GM and Ford Motor Co. all reached concession deals with the UAW in February to limit overtime, cut lump-sum cash bonuses and eliminate cost-of-living pay increases. The union also agreed to suspend the jobs bank in which laid-off workers are paid most of their wages.

Workers at Ford, which is not receiving government aid, ratified their deal, but the GM and Chrysler agreements were never presented to union members because they got hung up on funding for a union-run trust that will take over retiree health care expenses next year.

Then, the Obama administration said last month that the cuts outlined in GM and Chrysler's viability plans didn't go far enough, and the union would have to give up more. Just how much more has not been stated publicly.

GM has received $13.4 billion in government loans and may need more money this month as it tries to survive the worst auto sales downturn in 27 years. Chrysler has received $4 billion and may also need more funding to stay alive until its deadline.

The government said it will lend Chrysler up to $6 billion more if it completes a deal with Fiat and gains concessions from unions and debtholders.

But creditors that hold $6.9 billion in Chrysler debt — mostly banks and hedge funds — have rejected an offer from the Treasury Department to erase the debt for $1 billion. They are preparing a counteroffer that likely will include more cash and an equity stake in the company.

A committee representing the holders of $28 billion in GM bonds is awaiting an offer from the company that aims to slash its unsecured debt by at least two-thirds.

Associated Press Writer Rob Gillies in Toronto contributed to this report.

Fiat CEO: Concessions or no alliance with Chrysler

2009-04-15T07:07:00.000-07:00

Santiago Esparza / The Detroit News

Fiat Group SpA CEO Sergio Marchionne is ready to walk away from a proposed alliance with beleaguered Chrysler LLC if the automaker's union workers do not agree to concessions that would put their pay on the same scale as workers at U.S. plants owned by foreign car companies.

In a story posted today on The Toronto Globe and Mail's Web site, Marchionne said not getting concessions from the UAW and CAW are a breaking point for talks.

"Absolutely we are prepared to walk," he said in the story. "There is no doubt in my mind. We cannot commit to this organization unless we see light at the end of the tunnel.".......More

Chrysler's new deal-Different owners and Marchionne-led management team

2009-04-13T06:43:00.000-07:00

Different owners, a new board of directors and maybe a Marchionne-led management team

TURIN, Italy — As Chrysler LLC negotiates an alliance with Fiat S.p.A. that would satisfy the Obama administration, sources say the companies are discussing a revised ownership structure, a new board and possibly a different management team for Chrysler.

Among the options being discussed is a direct role in Chrysler's operations for Fiat CEO Sergio Marchionne — possibly even the chief executive's job.

Sources close to the merger negotiations say that after completing the deal, the plan is to elect a seven-member Chrysler board that would include representatives from Fiat and possibly President Barack Obama's automotive task force.

But the companies face major obstacles in getting the deal done. The ownership of the future Chrysler is still subject to complex negotiations involving Cerberus Capital Management LP, Daimler AG, the UAW and the big banks that hold Chrysler's debt.

A person familiar with the negotiations said the new management structure would divide the roles of CEO and chairman between two executives. The job of Chrysler chairman would be held by an American, the source said.

Since 2007, Chrysler's chairman and CEO jobs have been held by Bob Nardelli, appointed by Cerberus.

On March 30, Obama gave Chrysler and Fiat until the end of April to prove their alliance is workable. The government then would grant Chrysler up to $6 billion in additional loans. Chrysler already has received $4 billion.

Obama impressed

Marchionne (mar-kee-OHN'-nay) — the energetic, chain-smoking architect of Fiat's turnaround — has led the Italian automaker since 2004. In his March 30 speech about the auto industry, Obama praised Marchionne and described Fiat as a company where "the current management team has executed an impressive turnaround."

Another source familiar with the negotiations said Obama's task force may even dictate that Marchionne be directly involved in running Chrysler.

It's unclear whether Marchionne would try to exert hands-on control of Chrysler in the style of Carlos Ghosn, the CEO of Renault and Nissan. But there is evidence that he might try. The 56-year-old executive already spends several days each month in the United States, usually at the offices of Fiat's Case New Holland subsidiary in suburban Chicago.

Every other Friday evening, Marchionne boards a chartered overnight flight, snatching a few hours of sleep and arriving Saturday morning in Chicago. After two days working in America, he catches the red-eye return flight on Sunday.

Marchionne, who speaks accent-free English, holds both Italian and Canadian citizenships and earned university degrees in Toronto and Windsor, Ontario. He spent a decade working in Canada.

Asked about possible changes, Chrysler spokesman Todd Goyer issued a statement: "Chrysler has no management changes to announce. The job of Chrysler's current management team is to get the company on a solid foundation moving forward."

Obstacles remain

Speaking last week at the New York auto show, Chrysler co-President Jim Press said he is optimistic that Fiat and Chrysler can meet the government's requirements and form an alliance.

But he cautioned that Chrysler is preparing for bankruptcy if the alliance does not work out. "We've got to be prepared to take care of the equity and the assets," he said.

Besides the negotiations over the ownership of the future automaker, Chrysler negotiators are in talks with UAW officials about reducing Chrysler's $10.6 billion obligation to the union's health care trust.

The Treasury Department also is negotiating with the major banks holding $6.9 billion in Chrysler debt, according to a Bloomberg News Service report. Bloomberg said the four largest lenders are JPMorgan Chase & Co., Citigroup, Goldman Sachs Group and Morgan Stanley.

Cerberus has offered to give up its stake in Chrysler. Cerberus Chairman Stephen Feinberg is involved in the negotiations. Cerberus also must iron out a dispute in its effort to acquire Daimler's 19.9 percent stake in Chrysler. Cerberus aims to consolidate its ownership as part of the overall plan to restructure the company.

Speaking at a shareholder meeting last week in Berlin, Daimler CEO Dieter Zetsche said Cerberus was making "unacceptable" demands in negotiations to acquire the remainder of Daimler's stake.

The two sides have been wrangling since November over a Cerberus request to acquire Daimler's stake. Daimler sold majority ownership of Chrysler to Cerberus in 2007.

Fiat would own biggest slice of Chrysler under latest scenario proposed by U.S.

2009-04-06T06:57:00.000-07:00

Instead of Cerberus Capital Management and Daimler AG holding 80.1% and 19.9%, respectively, of Chrysler LLC, there will be a larger cast.

Under the latest scenario proposed by the U.S. government, Fiat SpA will have the largest block of Chrysler, at 20%. The remaining 80% will be allocated among a variety of secured creditors that include at least five banks and U.S. taxpayers.

Cerberus and Daimler likely will hold much smaller stakes because they still hold loans that helped finance the August 2007 acquisition of the Auburn Hills-based automaker.

Even the UAW could end up owning a piece of the company.

"They are trying to trade debt for equity among the current creditors," said Tom Stallkamp, a former DaimlerChrysler vice chairman and president. He is now a partner in Ripplewood Holdings LLC, a private equity fund. "It's all based on how much of a haircut the debt holders will accept."

Coincidentally, those debt holders include some of the giant banks -- J.P. Morgan Chase, Citicorp, Morgan Stanley and Goldman Sachs -- that auto industry advocates argue have benefitted from a double standard in how they accounted for government loans.

Debt-for-equity talks
There are three levels of Chrysler debt secured by such assets as manufacturing plants, equipment, vehicles, parts and real estate. The first level, valued by Chrysler at $6.9 billion, was borrowed from the banks. The second is $2 billion borrowed from Daimler ($1.5 billion) and Cerberus ($500 million). The third is the $4.3 billion in government loans committed in December and January.

If Chrysler were to file for bankruptcy, the banks would be first in line to sell assets, followed by Cerberus and Daimler, and finally the federal government.

"This is the worst possible time to be selling an auto plant," said Shelly Lombard, a credit analyst with Gimme Credit in New York.

Chrysler, Fiat and President Barack Obama's auto task force are working hard to avoid that outcome. To succeed, they must secure breakthrough agreements with the banks and the UAW. Then, the task force has said it would release up to $6 billion more to fund Chrysler's operations.

Unlike GM, which is dealing primarily with bondholders, Chrysler's debt is owed to banks and the government. Some of the bank loans have been sold to hedge funds and other investors. "It's hard to know who bought what, even with bonds, and it's harder still with bank loans," Lombard said.

One of the banks likely will act as an agent for the hedge funds. Then, the task force leaders, Steven Rattner and Ron Bloom, will negotiate for a settlement that offers the banks a fraction of the loans' face value in exchange for shares in the new Chrysler.

Challenges ahead
Fiat so far has not offered cash and has said it will not assume any current debt to partner with Chrysler. While Chrysler has valued Fiat's vehicles and powertrain technology at $8 billion to $10 billion, that won't likely satisfy the banks.

"Fiat is in many ways a reasonable long-term solution," said Craig Fitzgerald of Plante & Moran. "The big question is will $6 billion more from taxpayers be enough to fund Chrysler's turnaround."

The challenge with the UAW is to find a non-cash method to cover half of $10.6 billion Chrysler owes in 2010 to the Voluntary Employee Beneficiary Association, or VEBA, trust fund. The trust was created to cover health care insurance for UAW retirees.

If Fiat doesn't offer cash or its own stock, Chrysler may offer the union stock in the new company. Such a deal would save $5.3 billion, which could be enough to satisfy Obama's demand for more concessions, and bring the UAW into partnership with banks, taxpayers, Cerberus and Fiat.....More

Chrysler and Fiat must merge or Liquidate

2009-03-30T06:36:00.001-07:00

From The Ap
Chrysler and Fiat must merge to get more help for the Auto Task Force

Frustrated administration officials, speaking on condition of anonymity ahead of Obama's announcement, said Chrysler has been given a 30-day window to complete a proposed partnership with Italian automaker Fiat SpA. The government will offer up to $6 billion to the companies if they can negotiate a deal before time runs out. If a Chrysler-Fiat union cannot be completed, Washington plans to walk away, leaving Chrysler destined for a complete sell-off....More

Chrysler and Fiat Must Merge To Get More Help

2009-03-30T06:07:00.000-07:00

David Shepardson / Detroit News Washington Bureau

Washington -- The Obama administration will take a much more hands-on role in the restructuring of General Motors Corp. and Chrysler LLC, providing both with short-term aid but insisting on and overseeing immediate dramatic changes.

The administration has set strict timetables for GM and Chrysler to complete restructuring and if required changes are not made is likely to force the automakers into bankruptcy in the coming months.

The companies are likely to go even further in cutting staff and closing plants in order to prove their viability.

The administration's auto task force agreed to provide Chrysler with short-term aid for the next 30 days as the automaker works to complete a tie-up with Itay's Fiat SpA and said it would consider loaning the partnership up to $6 billion if a deal can be finalized.

But it warned that if Chrysler and Fiat cannot come to terms on a partnership, the Auburn Hills automaker would not get any more taxpayer money -- a move that would likely force the company's liquidation....more

Auto Task Force Bailout plan may be stricter than GM, Chrysler expected

2009-03-24T09:25:00.000-07:00

By Sharon Silke Carty, USA TODAY
DETROIT — The Treasury Department will announce this week a preliminary plan to help General Motors and Chrysler that sets goals and deadlines that could be more ambitious than the companies themselves have proposed, according to a Capitol Hill staffer briefed on the plan but who wished to remain anonymous because the proposal is not yet public.
Treasury's preliminary plan also could include a bridge loan to Chrysler that's less than the $5 billion the automaker wants, the staffer said. Treasury says details still are being finalized.

A more structured version of the plan will be detailed in April, when additional loan money could become available to the two troubled companies.

The Bush administration in December set a deadline of March 31 for the automakers to prove they would be viable with the help of emergency government loans. But since then, the car market has hit the skids, and both GM and Chrysler have said they need even more money to survive.

GM and Chrysler are operating on a combined $17.4 billion in government loans approved by the Bush administration. The two automakers have asked the Obama administration for another $21.6 billion and say they need it soon.

The president's auto task force is demanding that the car companies get significant concessions first.

GM bondholders are balking at swapping two-thirds of their GM debt for stakes in the company.

Bondholders warned the government this weekend that if they can't strike a deal with the automaker, the car company might be forced into bankruptcy. A group representing bondholders says many are not willing to take stock in place of bonds because they don't believe GM will be survive long enough to make the shares valuable.

That would result in "dire consequences for the company, the tens of thousands of hard-working Americans that GM employs and the economy as a whole," bondholder advisers from investment firm Houlihan Lokey wrote.

And although the United Auto Workers, which represents U.S. hourly workers, has agreed to concessions, the Canadian Auto Workers union hasn't reached an agreement with Chrysler.

Chrysler says that if it cannot get nearly $16 an hour in wage and benefit concessions from the CAW, as well as a guarantee of $2.3 billion in loans from Canadian governments and a break on a tax dispute with Ottawa, it might have to pull out of Canada, the Associated Press reported Monday.

Canada's the source of Chrysler's U.S.-market minivans and line of big sedans that includes the Chrysler 300 and Dodge Charger.

Buy AutoTaskForce.Com----Domain Names

Nardelli says more aid for financing would boost Chrysler sales

2009-03-18T13:36:00.000-07:00

Chrysler CEO Bob Nardelli called Tuesday for a second round of funding for the company's financial arm that would enable sales to customers who otherwise can't qualify for loans.

In an interview with CNBC, Nardelli also said Fiat would assume 35% of Chrysler's debt if the U.S. Treasury Department approves its proposed alliance with the Italian automaker.

Chrysler is operating with $4 billion in loans, and it's seeking $5 billion more.

But in the CNBC interview, Nardelli emphasized the effectiveness of a separate $1.5-billion loan the Treasury made to Chrysler Financial in January. Chrysler used that loan to subsidize zero-percent loans on new vehicles...More

President Barack Obama's Auto Task Force Visits Detroit

2009-03-09T06:06:00.000-07:00

WASHINGTON -- The top advisers for President Barack Obama's auto task force will have a chance today to literally kick the tires on Detroit's struggling automakers before deciding how much federal aid they're worth.

The visit, spurred by invitations from the automakers, will cap two weeks of intensive research by the presidential task force into all aspects of the U.S. auto industry as it suffers the worst slump in four decades. After today's trip, the Obama administration has only days to address warnings from General Motors Corp. and Chrysler LLC of imminent bankruptcy and collapse without at least $7 billion in aid by the end of the month -- $5 billion for Chrysler and $2 billion for GM....More

Buy Automotive Domain Names Like AutoTaskForce.Com,Net,Org,Info---Domain Names

Obama auto task force to come to Detroit next week

2009-03-06T13:32:00.000-08:00

WASHINGTON -- Leaders of President Barack Obama’s auto task force will travel to Detroit next week to meet with industry and labor officials worried about an imminent collapse of several companies absent federal aid.

An administration official said final details of the trip were still being worked out, but the task force visitors will include advisers Steven Rattner and Ron Bloom.

The task force has been conducting a string of meetings over the past two weeks to gather information and assess the depth of the problems facing the industry. General Motors Corp. and Chrysler LLC have said they need a total of $7 billion before the end of the month to avoid bankruptcy, and several suppliers are also on the brink.

Fiat Chief Executive Sergio Marchionne met with Rattner, Bloom and other members of the task force for two and a half hours today to discuss Fiat’s proposed alliance with Chrysler. Fiat has said it would take a 35% stake in Chrysler in return for sharing vehicle designs that could be used for several new Chrysler models.

GM Chrysler Merger part of Chrysler Viability Plan!

2009-02-19T09:45:00.000-08:00

Article from The Detroit Free Press-GM Chrysler Merger part of Chrysler Viability Plan!

Chrysler LLC, which is pushing forward on an alliance with Italian automaker Fiat SpA, said it believes a partnership with General Motors Corp. is still the "best option for the U.S. auto industry."

The comments came in Chrysler's restructuring plan filed late Tuesday with the Obama administration.

In the plan, Chrysler, which has already received $4 billion in federal loans, details its restructuring efforts, which include the elimination of 3,000 jobs and three vehicle models, as well as its request for $5 billion more in federal loans.

But Chrysler's plan also points to consolidation among U.S. automakers as a way to sustain the industry.

GM., which received $13.4 billion in federal loans, did not express that sentiment in its restructuring plan filed Tuesday.

Sen. Bob Corker, R-Tenn., who has been a critic of the domestic auto industry, said it's clear that Chrysler's best option is to partner with another automaker.

"Whether it's with Fiat, or whether it makes sense to talk about GM, a merger is their best chance for survival," he said in an interview with the Free Press.

Chrysler hints at a "strong need for industry consolidation, as it notes a merger with GM would create more value than a standalone Chrysler or Fiat alliance," Barclays Capital analyst Brian Johnson said in a note to investors Wednesday.

The Auburn Hills automaker is clear that the savings from a GM-Chrysler partnership would be at least five times more than what a deal with Fiat would offer.

Chrysler has said that discussions about such a partnership, which gained steam last fall before the two automakers approached Congress for aid, were taken off the table by GM.

But as GM and Chrysler approach the government for more money, decisions about the future might not be in their hands alone. Johnson said he expects government aid will continue, "with perhaps the condition of a merger of Chrysler into GM."

However, Corker said it wasn't clear whether a GM-Chrysler pairing would make sense, given the need for GM to cut jobs, plants and brands.

"If you look at what GM is trying to do, which is simplify, does it make sense to add to it?" Corker said. "It's a question that needs to be asked in light of the changes that have occurred."

A merger between GM and Chrysler would generate at least $36 billion in cash and boost operating earnings by $40 billion, Chrysler said.

Savings would come from combining purchasing power, as well as operations for manufacturing, sales and marketing research and development and corporate staffs.

The prospect of a GM-Chrysler merger met criticism across the Midwest, where one study said the combination would cost 35,000 jobs, including as many as 25,000 jobs in Michigan alone.

Promoting a plan that would lead to thousands of job cuts could be a political landmine.

In its plans to the government Tuesday, GM said it plans to cut 47,000 jobs worldwide this year while Chrysler plans 3,000.

And the tally could rise if either automaker is forced to file for Chapter 11 protection.

"The prospect of losing 25,000 jobs in a consolidation between General Motors and Chrysler seemed outrageous in October. Right now, it seems like the best-case scenario," said Patrick Anderson, principal at the East Lansing-based Anderson Economic Group, which studied the potential merger. But Anderson said amid weak vehicle sales, it would be harder to realize all of the cost savings a merger would ordinarily deliver.

David Cole, chairman of the Center for Automotive Research in Ann Arbor, said a Chrysler-GM combination is unlikely. But as the market improves, the two companies could team up to reap at least a portion of the cost-savings a merger would have delivered.

"I'm not convinced that that's off the table forever," Cole said.

Contact JEWEL GOPWANI at 313-223-4550 or jgopwani@freepress.com. Free Press Business Writer Justin Hyde contributed.

Creative thinker joins Obama's auto task force

2009-02-17T04:42:00.000-08:00

WASHINGTON — Ron Bloom, a key adviser to President Barack Obama’s new auto industry task force, brings a combination of Wall Street savvy, ties to labor unions, and a penchant for out-of-the box solutions to the government-led restructuring of General Motors and Chrysler.

Bloom, 53, a former investment banker who has worked with the United Steelworkers union since 1996, will serve as a top adviser to Treasury Secretary Timothy Geithner as the Obama administration attempts to revamp two corporate giants living off billions in government loans.

General Motors and Chrysler are scheduled to submit road maps to viability today that show how they will repay $17.4 billion in promised government loans. The companies face a March 31 deadline to complete their plans, or else the government can pull the loans, essentially forcing bankruptcy.

Described as cerebral and blunt-talking, Bloom has been credited for taking creative approaches to managing the downsizing of the steel industry and creating a leaner operating structure. He also advised airline pilots in 1994 in the $4.9 billion employee buyout of UAL Corp., the parent company of United Airlines, and he worked with auto parts supplier Dana Holding Corp. to develop a health care trust fund.

“He’s not someone who brings just a conventional cookie-cutter approach. He’s going to force people to think about new ideas,” said Andy Kramer, a Washington attorney who has sat on the opposite side of the bargaining table from Bloom.

Forgoing a single “car czar,” the Obama administration chose to create a multi-agency panel led by Geithner and White House economic aide Lawrence Summers. Advising Geithner, Bloom will have the day-to-day task of working with automakers, their bondholders and labor unions to force concessions, reprising a similar role he played during the consolidation of the steel industry in the last decade.

A Harvard Business School graduate, Bloom served as a vice president with the Wall Street firm Lazard Ltd., focusing on the steel and airline industries. As a top aide to the steelworkers union’s president, he helped resolve a 10-month strike against the Wheeling-Pittsburgh Corp. in 1997, broker an agreement with Goodyear Tire in 2003, and facilitate Esmark’s successful tie-up with Wheeling-Pittsburgh in 2006.

Chrysler official: No Fiat deal closing by Tuesday

2009-02-15T11:29:00.000-08:00

DETROIT (AP) — The deal for Italian automaker Fiat SpA to take a 35 percent stake in Chrysler LLC will not be finished until after Chrysler submits a restructuring plan to the federal government, a Chrysler official said Friday.

But the official, who did not want to be identified because the automaker is still working on the plan it must provide to the Treasury Department by Tuesday, said Chrysler will show how it can be viable as an independent company as well as with Fiat taking a stake.

Chrysler is living on $4 billion in government loans. The restructuring plan must show how the automaker will repay the money and become viable. If the government approves the plan, Chrysler will get another $3 billion in loans. The Fiat deal is contingent upon that happening, the official said.

The automakers said last month that they have a nonbinding preliminary deal for Fiat to give its small-car technology to Chrysler in exchange for a 35 percent stake in the struggling automaker. Chrysler's current small and midsize vehicle lineup has not sold well, and it lacks a subcompact model that Fiat could provide.

Chrysler has said that Fiat's vehicle architecture and engine technology are worth billions and would allow Chrysler to get small cars to market five or six years faster than Chrysler could on its own. Fiat also would get access to Chrysler's U.S. distribution network and its emissions control and large-vehicle technology.

The official said Chrysler is still negotiating concessions from debtholders and the United Auto Workers union, even with the deadline to file the viability plan with the government only four days away. Negotiations are to continue into the weekend.

General Motors Corp., which also has received government loans to hold off a bankruptcy filing, is working on its own plan under the same deadline. GM has received $9.4 billion in loans and hopes to get another $4 billion when its plan is approved.

Under the terms of Chrysler's loans, the government set a target for the company to swap much of its debt for equity, which will severely dilute the ownership stake of its current owners, Cerberus Capital Management LP and Daimler AG.

Chrysler will negotiate into the weekend with banks that hold its secured debt to swap part of it for equity. The government also wants Chrysler to convert to equity billions in cash payments it must make to a trust that will start paying retiree health care costs next year. The government also will get equity for its loans.

Those moves, coupled with Fiat's potential 35 percent stake, could leave Cerberus and Daimler with combined ownership of less than 10 percent, according to independent auto industry analyst Erich Merkle.

"My understanding is it would be the banks and the UAW that would own the company when they're done. They would be the larger stakeholders," Merkle said.

Currently, Cerberus, a New York private equity firm, owns 80.1 percent of the struggling Auburn Hills automaker, while Daimler, Chrysler's former owner, holds 19.9 percent. Cerberus is negotiating to take the Daimler stake.

Since Chrysler is a privately held company, it's unclear just how much debt the automaker has, but officials have said it is secured debt held by banks. Chrysler is obligated to pay about $9.9 billion into the union trust under the terms of a national contract deal reached with the UAW in 2007. That payment relieves the company of a $16 billion long-term liability for retiree health care.

The union gained federal court approval for the trust and plans to invest the money so it can pay health care costs for current and future retirees. General Motors Corp. and Ford Motor Co. also agreed to similar trusts in their union contracts.

Chrysler spokeswoman Shawn Morgan would not comment other than to say that the company continues to work with its stakeholders.

Both Chrysler and GM must prove they will be able to repay government loans and achieve "positive net present value." That means that the present value of a company's expected net cash flows exceeds the initial investment that must be made in the company.

Ford has borrowed enough cash privately and says it can avoid government loans. Nearly all automakers are reporting dismal sales in what has turned out to be the worst auto sales climate in 26 years.

Chrysler Vice Chairman Jim Press said Thursday that negotiations with the UAW and banks will continue into the weekend. He said full settlements with the stakeholders don't have to be reached until March 31.

Although a Fiat deal would mean Italian company owns 35 percent of the company, it would still create American jobs, justifying the loans, Press said.

With the Fiat deal gaining momentum, Nissan Motor Co. of Japan said Friday it has suspended plans for Chrysler to produce a Nissan pickup truck and Nissan to produce a small car for Chrysler.

Chrysler Fiat Merger: Fiat races to review Chrysler operations

2009-02-05T09:40:00.000-08:00

February 3, 2009 11:00 CET
(Reuters) -- Italian carmaker Fiat is racing to review the operations of Chrysler LLC before Chrysler must meet a U.S. government deadline in two weeks, Fiat CEO Sergio Marchionne told the Wall Street Journal.

Under the terms of the $4 billion in federal loans Chrysler has received, it must present a plan by Feb. 17 showing how it intends to be viable.

Fiat plans to take a 35 percent stake in Chrysler in a deal that will give the Italian carmaker the scale it needs to survive, while Chrysler can expand its product portfolio to include small, less-polluting cars.

Marchionne said Fiat is still analyzing Chrysler's vehicle production operations and then will turn to studying its finances, the newspaper said.

Marchionne reiterated that Fiat will not put any cash into Chrysler but will provide small cars and fuel-efficient engines that would cost Chrysler $3 billion or more to develop.

Chrysler Fiat News:Fiat CEO says Chrysler concessions needed for deal

2009-01-25T07:36:00.000-08:00

Fiat CEO says Chrysler concessions needed for deal

Fiat CEO Sergio Marchionne said he is optimistic that Chrysler can be turned around quickly. But Marchionne stressed that for the Fiat’s relationship with the Auburn Hills automaker to work, all of Chrysler’s stakeholders will have to make concessions....More

U.S. $3 billion loan part of Chrysler-Fiat deal

2009-01-22T09:57:00.000-08:00

DETROIT (Reuters) – Chrysler LLC's deal with Fiat SpA (FIA.MI) depends on the U.S. automaker receiving an additional $3 billion emergency loan from the U.S. government, the company's product development chief said on Wednesday.

"I think that is part of the deal," Frank Klegon said when asked if the automaker needed the additional $3 billion for the Fiat deal to be completed. "That is part of the process. The expectation is that that is an important part of it."

Chrysler, which had asked for $7 billion, received $4 billion U.S. emergency loan on January 2. The automaker has said it is counting on getting the rest of the money to keep operating.

Klegon believed the $3 billion of additional government aid was part of a term sheet Chrysler had with Fiat on the alliance. Chrysler has been calling the request for additional support a second tranche, or the second half of the original $7 billion of aid it sought late last year.

Chrysler, owned by private equity firm Cerberus Capital Management, announced on Monday an alliance with Fiat that would give the Italian automaker a 35 percent stake in Chrysler in exchange for access to its technology and overseas markets.

Fiat would help Chrysler put together the restructuring plan Chrysler has to submit to the U.S. government by February 17.

Klegon said the U.S. Treasury had been alerted to the deal and he hoped it would approve of the agreement.

Klegon said discussions had been going on with Fiat on the product side for some time.

"I had no knowledge there was a bigger discussion going on," he said, adding the deal does not bar the automaker from other alliances.

Klegon said Chrysler's alliance with Nissan Motor Co Ltd (7201.T) that would provide small cars to Chrysler and large trucks to Nissan was still going forward, as was Chrysler's minivan production for Volkswagen AG (VOWG.DE).

Klegon did not know if Chrysler would keep all three brands, but, ultimately, that would not be the product development chief's call.

"Cerberus are the guys making the deals. They are the ones who at the end of the day negotiate with Fiat," he said. "We are obviously engaged as the operating side and the product side, but the actual deal is under Cerberus leadership."

Under the terms of the deal, which has to be approved by the U.S. government, Fiat would not pay cash for its stake in Chrysler.

Chrysler's sales tumbled 30 percent in 2008 and it ended the year with only $2 billion in cash and reliant on a government bailout to stay afloat.

Chrysler, which owns the Jeep, Dodge and Chrysler brands, is 80.1 percent owned by Cerberus, which paid $7.4 billion for its stake in 2007. Former Chrysler parent Daimler AG (DAIGn.DE) holds the rest of Chrysler and is looking to sell its stake.

Daimler has written down the value of its remaining 19.9 percent stake in Chrysler to zero.

Fiat has said it could raise its stake beyond the initial 35 percent, but that step would depend on the success of Chrysler's restructuring.

(Reporting by Poornima Gupta and David Bailey; Editing by Andre Grenon)

Mixed reviews in Congress for Fiat-Chrysler deal

2009-01-22T06:14:00.000-08:00

WASHINGTON – Fiat's proposed deal to take a 35 percent stake in Chrysler in exchange for access to a lineup of more fuel-efficient cars received mixed reviews in Congress on Wednesday, with one lawmaker suggesting it could raise questions among taxpayers.

Sen. Bob Corker, R-Tenn., said the proposed alliance involving Chrysler, whose majority owner is New York-based private equity firm Cerberus Capital Management LP, creates "an interesting dilemma for U.S. taxpayers" in which they would essentially finance a partnership between Chrysler and a foreign automaker.

The Bush administration gave Chrysler LLC a $4 billion loan earlier this month and the automaker's finance arm received a separate $1.5 billion infusion last week to expand its lending practices. Chrysler could receive another $3 billion in loans if the Obama administration approves a restructuring plan expected to be submitted in mid-February.

"Cerberus made a bad investment and in order for them to get that investment out of their portfolio of holdings, U.S. taxpayers have had to write an $8.5 billion check to Fiat," said Corker, who urged General Motors Corp. and Chrysler to seek concessions from unions and bondholders in exchange for government financing.

"For the U.S. taxpayer, they have to be scratching their head a little bit," he said.

Despite the concerns, Corker said the agreement could strengthen Chrysler's viability plan and be "the best thing that could happen with Chrysler."

Chrysler and Fiat Group SpA announced Tuesday a nonbinding agreement to establish a global strategic alliance that would help Chrysler bring badly needed small cars to its showrooms while helping the maker of Fiat, Lancia and Alfa Romeo vehicles re-enter the American market.

Analysts noted Fiat would not be required to provide cash in the deal, but its willingness to partner with Chrysler could provide assurances to Washington about the company's long-term prospects.

The agreement "will significantly improve the chances of Chrysler paying that money back," said Rebecca Lindland, an auto industry analyst with the consulting firm IHS Global Insight.

Lindland said the deal would could give Chrysler access to markets in Russia and Brazil and help the company develop smaller, fuel-efficient cars to compliment its truck lineup.

Sen. Tom Carper, D-Del., said the deal could raise concerns among lawmakers but he noted that Chrysler already shares technology with German automaker Daimler AG, which owns 19.9 percent of the company.

"The idea of a partnership, not an ownership situation, but a partnership which allows Chrysler to enjoy and receive some technology input in return for building small cars in this country .... that may be a good idea," Carper said.

Sen. Debbie Stabenow, D-Mich., said she had not received details from Chrysler, which employs thousands of workers in her home state. "The most important thing is how are they going to structure it and will we keep jobs in the United States?" she asked.

The alliance with Fiat would be included in a viability plan to the Treasury Department, which is due by Feb. 17, and could help the company convince the government to provide an additional $3 billion in loans.

"The nonbinding term sheet with Fiat is consistent with the U.S. Treasury's requirements," Chrysler said in statement late Wednesday. "Chrysler will seek U.S. Treasury approval for this transaction under its loan agreement, as well as customary regulatory approvals."

If Chrysler fails to achieve viability by March 31, the new Obama administration could call back the $4 billion in loans, essentially pushing the company into bankruptcy.

Fiat spokesman Gualberto Ranieri said the alliance was contingent upon regulatory approvals by the Treasury Department.

Chrysler product development chief Frank Klegon told reporters in Detroit at the Automotive News World Congress that he expected an additional $3 billion in government financing to be an important part of the process for the potential alliance.

AP Auto Writer Tom Krisher in Detroit and Associated Press Writer Ariel David in Rome contributed to this report.

Chrysler And Fiat Merger

2009-01-21T05:34:00.000-08:00

From Forbes Jerry Flint

The announced deal between Chrysler and Fiat has benefits for both, but it is not a game changer--not yet.

The alignment between Fiat of Italy and Chrysler does not exactly save Chrysler, but it gives Fiat an entry into the U.S. In short, Fiat is to get 35% of Chrysler, will not pay any cash for the stake, and it will give Chrysler access to its technology.

Fiat (nyse: FIA - news - people ) had publicly said it wanted a production base in North America for its Alfa Romeo brand--and presumably the Fiat brand, too. Through its 35% interest that it is getting in Chrysler, it would presumably have access to a U.S. plant to build its cars.

The chief executive of Fiat, Sergio Marchionne, has also worried that his company was not big enough to survive in today's world. Marchionne was born in Italy in 1952 but built his early career in Canada and has dual Canadian and Italian citizenship. Chrysler has some Canadian plants, and the Canadian autoworkers union, separated from the American UAW, has been quite cooperative in working with the industry in recent years.

So at no cash cost, Fiat may have its production base on this continent. What about Chrysler? The company has been weak technically and does not have enough money to finance the kind of new vehicle programs that Chrysler needs to stay competitive in this market.

Fiat is strong in small cars and in their engines and transmissions, as well as in luxury cars and diesel engines. Getting the technology could be a huge help for Chrysler, but the American company will still need the money and ability to create new cars even with Fiat technology.

The alliance might help Chrysler if it needs to get more money from the American government in its battle to survive.

Chrysler's strength has been in sport utility vehicles, pickup trucks and minivans. We do not know Fiat's degree of interest in these businesses. Meanwhile, another foreign maker, Nissan (nasdaq: NSANY - news - people ) (which is part of the Renault/Nissan alliance) has an agreement with Chrysler whereby Nissan is to get a version of the Dodge Ram, a big pickup, and Nissan is to build small cars destined for Chrysler....More

Fiat Nears Stake in Chrysler That Could Lead to Takeover

2009-01-20T06:25:00.000-08:00

By STACY MEICHTRY in Rome and JOHN STOLL in Detroit
In an attempt to revive two of the world's storied auto makers, Italy's Fiat SpA and Chrysler LLC are poised to announce a partnership as soon as today in which Fiat could take control of the U.S. company's operations, people familiar with the matter said.

Under terms of a pact that is being hammered out, Fiat is likely to take a 35% stake in Chrysler by the middle of this year. It would have the option of increasing that to as much as 55%, these people said.

Fiat, the stronger of the two, wouldn't immediately put cash into Chrysler. Instead it would obtain its stake mainly in exchange for covering the cost of retooling a Chrysler plant to produce one or more Fiat models to be sold in the U.S., these people said. Fiat would also provide engine and transmission technology to help Chrysler introduce new, fuel-efficient small cars, they said.

The deal is the latest maneuver by Fiat's chief, Sergio Marchionne, who has pulled the Italian company back from the brink collapse since taking over in 2004.

The partnership would provide each company with economies of scale and geographical reach at a time when both are struggling to compete with larger and more global rivals like Toyota Motor Corp., Volkswagen AG and the alliance of Renault SA and Nissan Motor Co.

Chrysler last year sold two million cars and trucks world-wide, with almost all of its sales in North America. Fiat sold 2.5 million vehicles and is heavily dependent on Europe -- particularly its home market in Italy.

While Fiat has a wider global reach than Chrysler, the two auto makers are smaller players compared to their global rivals. Toyota and General Motors, for instance, each have sold more than nine million vehicles annually...More

Chrysler News:Chrysler and Fiat sign merger agreement

2009-01-20T05:16:00.000-08:00

Italian carmaker Fiat and US car concern Chrysler have signed an agreement to merge their companies, Chrysler disclosed.

Chrysler, at its Auburn Hills, Michigan headquarters, said that the agreement is still preliminary and not yet binding.

Further details were not immediately disclosed. Earlier on Tuesday, Fiat deputy chairman John Elkann said that the Turin-based carmaker is in talks with Chrysler amid reports of a possible purchase by the Italian company of a majority stake in the ailing US producer.

"It is no secret that we are talking. It has been a while that we are in talks," Elkann, a heir of the Agnelli family which controls Fiat, was quoted as saying by the ANSA news agency.

Elkann indicated more details on a possible deal would be available following a Fiat statement later on Tuesday and a meeting of the company's board scheduled for Thursday.

Earlier on Tuesday, Milan's Bourse announced trading in Fiat stocks had been suspended pending the statement's release.

The Wall Street Journal reported on Monday that Fiat was considering acquiring a 35 per cent ownership in Chrysler by mid-year as the first step towards the acquisition of a possible majority stake in the US company.

The deal would give Fiat long-sought access to the US market for its small and mid-sized cars, with the Fiat 500 and Alfa Romeo reported to be at the top of the list.

Under the deal, Fiat could build its own small cars in the US and use the Chrysler distribution network. In exchange, Chrysler would tap Fiat's expertise building small and medium-sized cars to advance its own plans for new, front-wheel-drive models with lower emissions.

As petrol prices soared and the economy stalled, sales of Chrysler's mostly large, fuel-inefficient cars and trucks fell 30 per cent in 2008.

With auto sales at a 27-year low, Chrysler has laid off tens of thousands of workers and had to beg for government rescue financing of $US5.5 billion ($A8.21 billion) just to stay afloat for the next few months.

The loan terms require Chrysler to deliver a credible survival strategy by March, and an alliance with Fiat would be a tangible new strategy.

Fiat, which exclusively makes small cars with narrow profit margins, is struggling to keep its own head above water in Europe's expensive labour market.

Chrysler News:Chrysler Says It Won't Sell Pieces of Company

2009-01-16T03:15:00.000-08:00

DETROIT -- Chrysler LLC on Wednesday shot down fresh speculation the auto maker is considering selling off pieces of its operations amid increasing concern about its ability to survive.

In a hastily organized conference call, Chrysler President Tom LaSorda said reports the company was in talks about selling its Jeep brand and other key assets are "absolutely false."

Chrysler is "going to be around for a long time," he said. "We are not going under."

Mr. LaSorda said he couldn't say if Chrysler's majority owner, Cerberus Capital Management LP, was considering selling the company as a whole.

It's time to buy back into American Vehicles!

GM UAW News On Concessions

2009-01-16T03:07:00.000-08:00

The latest news reported by Fox 2 Detroit:

GM will not ask the UAW for wages concessions.

Probably due to the fact that the last contract in 2007 included wages concessions. The new UAW assembly employees will earn around $14 dollars an hour.
Remember the new car czar will have to approve the companies plan. More than likely the czar will demand pay cuts.

Chrysler News:Jeep To Renault-Nissan and Magna is Cerbrus Selling off Chrysler?

2009-01-14T05:21:00.000-08:00

Another Chrysler sell off article!

Jeep To Renault-Nissan, Belvidere To Magna Steyr, PT Cruiser To China. Maybe

Chrysler has been - some say desperately - seeking to “sell key assets” for a while. The Nikkei (sub) now says that Chryler might be getting close. The usual “unnamed people with knowledge of the discussions” whispered that Chrysler is talking to Nissan-Renault and the Canadian auto supplier Magna. The topics of the discussion are the Jeep brand and Chrysler’s Belvidere plant. The Jeep brand would go to Renault-Nissan, Magna would take the plant.

The parties aren’t strangers.

Chrysler had announced an alliance with Nissan last April.

As for Magna, the interest probably stems from Magna’s subsidiary Magna Steyr, which is creating more and more auto contract manufacture business. Magna Steyr has produced the Chrysler Voyager from 2002 to 2007, and currently produces the Chrysler 300C, the Jeep Commander and Jeep Grand Cherokee. Magna was one of the bidders for Chrysler when it was sold by Daimler in 2007.

According to Reuters, Chrysler has been in talks with Chinese automakers Chery and Guangzhou Automobile Industry Group Co, to sell them the PT Cruiser “brand” and tooling.

Of course, nobody will officially confirm that anything is true. Reuters says that representatives of Chrysler, Cerberus, Magna, and Nissan declined to comment. A spokeswoman for Renault denied talks were under way.

Reuters say there is reason for secrecy and plausible deniability: Renault-Nissan is looking to see whether a deal to acquire Le Jeep would hurt access to U.S. government funding. Good thinking.

[For the uninitiated: an asset sale is when you sell what's owned by the company without selling the company-- and the liabilities that go with it.]

Chrysler News:Corker hopes Chrysler will merge

2009-01-14T05:15:00.000-08:00

Senator says GM's debt load is too high

Rick Kranz
Automotive News

DETROIT -- Tennessee U.S. Senator Robert Corker came to the Detroit auto show today and said Chrysler LLC needs to find a merger partner and General Motors is carrying too much debt.

Corker, a freshman Republican, emerged as a point man in the automotive debate after he and a group of Southern lawmakers blocked auto-bailout legislation last month.

Leading a throng of reporters on the floor of the show, Corker said he came to Detroit in response to a plea by Michigan Attorney General Mike Cox. Cox asked lawmakers to visit the show in a column published in Tuesday's Washington Post.

Corker's visit underscored the attention the industry has drawn as the U.S. economy reels from the longest recession since the early 1980s. At the end of 2008, U.S. auto sales had plunged to levels not seen since 1982.

In response to a reporter's question about Chrysler, Coker said the automaker's best chance of survival is with a partner.

"Chrysler probably needs to merge with somebody, not necessarily go away from the standpoint of existence,'' he said. "It appears to me based on what I have looked at that they have not invested in technology and those kind of things necessary to be a standalone.

"My hope is they will in fact merge and be a viable part of Michigan and our country."......More

Chrysler News:Chrysler 200c EV concept offers social networking capabilities

2009-01-11T14:35:00.000-08:00

The Chrysler 200c EV concept vehicle, revealed today at the North American International Auto Show in Detroit, would offer social networking capabilities that could wirelessly connect drivers to friends in other vehicles.

The vehicle's personalized profile system would interact with Web sites such as Facebook and Twitter, said Frank Klegon, Chrysler's executive vice president of product development. Passengers could surf the Internet, scroll through a library of songs or other media, and find traveling information.

Chrysler's vehicle would be able to travel 40 miles without using gasoline - the same fuel economy General Motors is promising with the Chevrolet Volt extended-range electric vehicle.

But the heavy emphasis on interior electronics and design illustrates an increasing focus in the industry on combining great design with alternative powertrain technology under the hood.

Klegon said the 200c EV would present a "seamless, harmonious link between the vehicle and the home or your office."...More

Hyundai Genesis, Ford F-150 named top vehicles

2009-01-11T14:29:00.000-08:00

Richard Truett
Automotive News
January 11, 2009

DETROIT -- The 2009 Hyundai Genesis today was named the North American Car of the Year by a panel of 50 of the nation's top automotive journalists. The redesigned 2009 Ford F-150 hauled away Truck of the Year honors

The Genesis defeated the Volkswagen Jetta TDI and Ford Flex. The F-150 came out on top over the redesigned Dodge Ram and Mercedes-Benz ML320 Bluetec.

The awards are given to the vehicles that get the most points by the panel of journalists. Each category had a total of 500 points this year, 10 points per judge.

"This award tells people that Hyundai maybe is a different car company than what they think," said John Krafcik, acting COO of Hyundai Motor America. "It signals that these guys have arrived."

The Genesis earned 189 points, just ahead of the Flex with 180 points. The Jetta TDI finished third with 131 points.

This was the third time Ford Motor Co.'s signature pickup truck has won the award. It also took the top honor in 1996 and 2004. This year, the F-150 took 259 points while the Ram garnered 167 and the ML320 Bluetec earned 74.

This year was the first time that two diesel-powered vehicles, the Jetta TDI and the ML320 Bluetec, made the list of finalists. It was also the first time a Korean vehicle, the Genesis, has been a finalist.

Voting started in September from a list of 14 new or substantially revamped cars and 12 new or redesigned pickups and SUVs. Cars that didn't make the final cut include the Dodge Challenger coupe, the Honda Fit and the Toyota Venza crossover. On the truck side, the Chevrolet Traverse, Volkswagen Tiguan and Subaru Forester didn't make the list of finalists.

UAW supporters rally outside Detroit Auto Show

2009-01-11T14:22:00.000-08:00

Louis Aguilar / The Detroit News
Dozens of United Auto Workers and their supporters are rallying outside the North American International Auto Show to defend their wages, which could be cut under current terms of the federal loans to General Motors Corp. and Chrysler LLC.

Carrying placards with such slogans as "I'm not a foreign auto worker", UAW workers like Tony Browning, a 34-year-Chrysler veteran, say many hourly workers will not accept deep wage cuts.

"This whole thing about we make so much more than foreign competitors is a lie," Browning said, who works on the line at Chrysler's Sterling Assembly plant. "We work damn hard for our money and I don't see a whole lot of people who are going to vote to cut our paychecks in half.".......More

Lauer Interviews GM's CEO, UAW President

2009-01-10T07:28:00.000-08:00

UAW, Automaker Contract Negotiations Set For Monday

DETROIT - TODAY Show's Matt Lauer interviewed General Motors Corp.'s CEO Rick Wagoner and United Auto Worker President Ron Gettlefinger at the GM Tech Center in Warren Thursday.

The interview came days before union and automaker leaders are scheduled to begin contract negotiations Monday as a required stipulation under Washington's billion-dollar bridge loan to the GM, Chrysler LLC and Ford Motor Company.

The $13.4 billion federal loan package granted to GM last month requires that the UAW make concessions and also demands that GM submit a restructuring plan to the government by March 31....More

The UAW Meltdown | The End Of The UAW

2009-01-10T07:03:00.000-08:00

We are looking at the end of the UAW, they can no longer strike against the auto companies and that was their only strength.

As the UAW GM Concession talks begin, the future grows bleaker for UAW members. We now know that Ron Gettelfinger cut a deal, he agreed to never strike again to get the auto rescue loans for GM and Chrysler.

If the UAW strikes all the rescue loan must be paid back to the government. Which means any of the money that would be used for retirees and benefits (VEBA) would be at risk. The UAW is locked in for the ride.

If this was a condition set by George Bush or the Treasury, why did Ron Gettelfinger agree and didn't inform the Union members?

If the Government and auto companies are going to dictate what the wages and benefits are going to be, why does the auto worker have to pay a union?

The transplant auto companies are paying more pre hour and they have medical benefits, Why should the UAW worker make less than the southern workers and less benefits?

The Government will be in partial control of the auto companies and the UAW has no bargaining power.

Why would the new age auto worker want to be in the UAW if he or she is only making $14 an hour with no pension???

Good Luck UAW Members!
J.E.
GMCHRYSLERNEWS

Big 3 pension gap grows

2009-01-10T07:01:00.000-08:00

Feds warn of risks in rising $41B shortfall
David Shepardson / Detroit News Washington Bureau
WASHINGTON -- The outgoing director of the U.S. Pension Benefit Guaranty Corp. warned Friday that Detroit's Big Three automakers face a $41 billion pension shortfall.

While the companies continue to meet government funding requirements, the situation raises concerns for the agency, which takes over pensions when companies fail, given the financial problems facing the struggling auto industry.

"We're not trying to tell people that the pension house is on fire," Charles E.F. Millard said in an interview. "The point is that in many ways this has a similar look to other situations, such as a Bethlehem Steel."

The pension corporation assumed the pensions of 95,000 people at Bethlehem Steel in 2002, when the company filed for bankruptcy, and ended up on the hook for $3.7 billion in pension costs. That plan was underfunded by $4.2 billion.

Millard said policymakers need "a clear understanding of the magnitude of the numbers and the risks" associated with the automakers.

In total, the Big Three pensions cover nearly 1.3 million people. If all three automakers were to collapse and turn their plans over to the pension corporation, the agency estimates it would pay out $13 billion of the $41 billion, because of limits set by Congress on how much the pension corporation can cover. The agency generally has a yearly cap of $54,000 in benefits for people who are 65.

A $13 billion payout would more than double the agency's $11 billion deficit.

"It is certainly possible that none of these companies ever files for bankruptcy," Millard said. "It is certainly possible that they all do." He said the risk to the agency "is significantly greater than it was six or seven months ago."

As of Nov. 30, the pension plans for hourly and salaried workers at General Motors Corp. had a combined deficit of $20 billion and Ford Motor Co. had an $11.7 billion deficit, according to Millard; Chrysler LLC had a $9.3 billion deficit as of Jan. 1. ...More

The UAW Can No Longer Strike! If So All Bailout Money is to be returned.

2009-01-09T06:04:00.000-08:00

GM, Chrysler's federal loan deals bar strikes

DETROIT – Provisions of General Motors' and Chrysler's $17.4 billion in federal loans automatically places them in default if union workers go on strike.

A General Motors Corp. filing this week with the Securities and Exchange Commission detailed the provision as part of its $13.4 billion in federal loans.

A person briefed on Chrysler LLC's $4 billion loan, who didn't want to be identified because the company is in talks with the United Auto Workers union about concessions, confirmed Thursday that the Chrysler deal also has a similar provision.

The UAW isn't a party to the deal and hasn't threatened a strike, its most potent weapon against the Detroit automakers.

The UAW and the automakers have a Feb. 17 deadline to agree to concessions to lower labor costs.

GM News:GM says China '08 sales up 6 pct but growth slows

2009-01-06T05:03:00.000-08:00

BEIJING – General Motors Corp. said Tuesday its sales in China rose 6 percent to 1.09 million vehicles in 2008, but growth slowed as consumers held back amid an economic downturn.

GM is looking to China's booming auto market to drive global sales growth as demand in North America and other developed markets slump. In 2007, the Detroit-based automaker's China sales, including joint ventures, rose 19 percent.

"A series of natural disasters and an increase in fuel prices earlier in the year exacerbated the impact of the global economic downturn in China," Kevin Wale, president of GM China, said in a statement.

GM is one of China's top automakers along with Germany's Volkswagen AG. Global producers have raced to open factories and tailor models for China, which has grown into the world's second-biggest vehicle market after the United States.

GM has been aggressive in China, setting up eight joint ventures, a vehicle development center in Shanghai and an alternative fuel research lab. Robert Socia, vice president of Shanghai GM, its passenger car joint venture, said in November the Chinese market is "very, very important to us."

The largest American carmaker says its new Cadillac CTS sedan was designed for China, with a bigger back seat because many buyers have chauffeurs. The company says it is working on five new models for China to be sold under its Buick and Chevrolet brands.

In its home U.S. market, GM sales of cars and light trucks fell 31 percent in December from the year earlier. Last month, Washington agreed to provide $17.4 billion in emergency, short-term loans for GM and fellow U.S. carmaker Chrysler LLC to help them survive the downturn.

China's auto sales, which grew in recent years at double-digit rates, have weakened as economic growth slowed. In November, sales of cars and light trucks plunged 13 percent from a year earlier, according to J.D. Power & Associates.

Analysts say China's total auto sales growth last year should be about 8 percent, down from 22 percent in 2007. GM says its expects passenger car sales to recover to about 10 percent growth in 2009.

Sales for GM's Chevrolet brand rose 15.7 percent in 2008, the company said.

Sales of the Wuling brand, made by SAIC-GM-Wuling, a three-way partnership with Shanghai Automotive Industries Corp. and Wuling Automobile Corp., rose 17.4 percent.

The Wuling Sunshine minivan was China's top-selling passenger vehicle in 2008, with 408,774 units sold. The company's top-selling passenger car was the Buick Excelle, with 175,417 units sold.

Shanghai GM sales were down in 2008 due to limited new model introductions. The company said it plans to renew its portfolio with two new Buicks, the Regal and Enclave, and the Chevrolet Cruze.

Ford Motor Co. says it will release 2008 China sales on Friday. Volkswagen data also are due out shortly.

China's young but ambitious domestic automakers also have seen the economic downturn erode strong sales growth.

Sales for Chery Automobile Co., the country's biggest domestic producer, were down 9 percent and those for No. 2 Geely Group Ltd. were flat in the 11 months through the end of November, according to J.D. Power.On the Net: General Motors Corp

Chrysler News:Automakers' U.S. Sales Tumbled In Dec.Chrysler Hit Hardest, With 53% Plunge

2009-01-06T04:58:00.000-08:00

Chrysler's U.S. sales plunged 53% from a year earlier in December and other top automakers' sales shrank more than 30%, as the industry finished off its worst year since 1992 on a low point.

Chrysler said Monday that it will offer additional discounts after sales sank to 89,813 vehicles last month. Ford's (NYSE:F - News) sales dropped 32% to 138,458 and GM's 31% to 220,030.

Toyota's sales plunged 37% from December 2007 to 141,949 vehicles, Honda's (NYSE:HMC - News) 35% to 86,085 and Nissan's 31% to 62,102.

Worries about rising unemployment, a deepening recession and the credit crunch have led consumers to put the brakes on auto purchases, driving Chrysler and GM to the brink of bankruptcy and likely sending Toyota to its first operating loss in 71 years.

"The main reason why we are where we are is because of consumer confidence," said Jesse Toprak, executive director of industry analysis for auto site Edmunds.com.

Consumer confidence fell to a record low in December, and jobless claims hit a 26-year high amid a recession that began in December 2007.

Also on Monday, Porsche said sales fell 25.5% in December to 2,154 vehicles, while Daimler's sales fell 23.5% to 20,848 vehicles.

Stocks opened lower on Monday and stayed there, reacting little to the expected plunge in auto sales. The Dow fell 0.9%, the S&P 500 lost 0.5% and the Nasdaq declined 0.3%....More

Auto Makers Close Books on Awful Year, Face More Ills

2009-01-06T04:56:00.000-08:00

By SHARON TERLEP and MATTHEW DOLAN
U.S. auto sales tumbled again in December, capping one of the worst years for the industry in decades and solidifying the view that more turmoil lies ahead in 2009.

For the month, sales of cars and light trucks fell 36% to 896,124 vehicles, according to Autodata Corp, a Woodcliff Lake, N.J., research firm. That is an improvement over both November and October; still, it was the fourth month in a row that sales failed to exceed one million vehicles.

For the full year, U.S. auto sales declined 18% to 13.24 million vehicles -- the lowest total since 1992, Autodata said.

Continuing the pattern of recent months, December's vehicle sales fell as cash-strapped Americans simply stayed away from dealerships or had difficulty securing auto loans. For many consumers, worries about losing their jobs and sinking home values trumped the year-end rebates and financing deals auto makers rolled out in the last few weeks...More

Toyota to suspend production for 11 days in Japan

2009-01-06T04:52:00.000-08:00

Shino Yuasa / Associated Press
TOKYO -- Toyota is suspending production at all 12 of its Japan plants for 11 days over February and March, a stoppage of unprecedented scale for the nation's top automaker as it grapples with shrinking global demand.

The last time Toyota Motor Corp. halted production at all its Japan plants was in August 1993, when demand plunged because of a rising yen, and that was for only one day, according to the company.

A global economic downturn has hammered the auto industry in Japan and elsewhere, forcing carmakers to cut staff, lower production and delay new models. Major automakers in the U.S. had teetered on the brink of collapse until securing a multibillion dollar government lifeline.

"We are coping with a slump in global sales," Toyota spokesman Hideaki Homma said Tuesday. "Demand in the world auto market is so depressed that every model is falling sharply in sales."

Toyota said last year that it was stopping production at its 12 domestic plants for three days in January. But it decided on additional closures because of the global downturn. Toyota will stop output for six days in February and five days in March, it said.

Of Toyota's domestic factories, four produce vehicles while the rest make engines and auto parts.

Overnight, Toyota reported that its U.S. sales in December were down 37 percent on year, a worse drop than Ford Motor Co.'s 32 percent drop and General Motor's 31 percent slide.

Toyota last year suspended production at its auto plants in Alabama, Indiana and Texas for three months, and shut down output for two days in December at all its North American vehicle factories including five in the United States, one in Canada and another in Mexico.

Chrysler LLC also shut down its plants for a month in December, longer than the usual two-week break, while GM has said it would shut down a plant in Thailand for up to two months.

Toyota is also struggling in its home market, which has been stagnant for years. The sales drop has worsened amid a global recession.

Sales of new vehicles in Japan fell to 3.2 million vehicles last year, the lowest in 34 years, the Japan Automobile Dealers Association said Monday.

Last month, Toyota said it was slipping into its first operating loss in 70 years, expecting 150 billion yen ($1.66 billion ) of operating losses for the fiscal year ending March 2009.

Toyota, which makes the Prius gas-electric hybrid and Camry sedan, expects 50 billion yen ($555 million) in net profit, down from 1.7 trillion yen earned the previous year.

Chrysler News:Chrysler finally gets $4 bn aid from US govt

2009-01-03T10:56:00.000-08:00

January 03, 2009

US auto major Chrysler on Friday said it has received four billion dollars as emergency loan from the government, a move to avert a collapse of the ailing automaker.

"Chrysler received an initial four billion dollar loan to help bridge the current financial crisis," the company said in a statement.

The amount is a part of the $13.4 billion lifeline approved by the US government for General Motors and Chrysler last month.

"This initial loan will allow the company to continue an orderly restructuring while pursuing our vision to build the fuel-efficient, high-quality cars and trucks," Chrysler chairman and chief executive Bob Nardelli said in the statement.

The loans to the auto makers would be provided under certain conditions, including a limitation on executive pay.

Moreover, US President George Bush had said that the companies have to come up with viable plans for restructuring by March 31, 2009.

The auto makers would be given "three months to get in place plans to get restructure which we believe they are capable of doing...," Bush had said.

The US President had pointed out that the entities have to pay back the loans if they fail to come up with restructuring plans.

Earlier, the US Treasury had thrown a $6 billion lifeline for GMAC, the finance arm of beleaguered carmaker General Motors.

GMAC is the major lender for General Motors's 6,500 dealers across the country.

Chrysler Faces Criticism for Full-Page 'Thank You America' Ads

2008-12-31T11:28:00.000-08:00

Chrysler is facing a backlash from taxpayers and conservative groups after the ailing auto company took out a series of full-page newspaper ads last week to thank Americans for "investing" in the company through the government's $17.4 billion auto industry bailout plan. The ads ran last week in several major daily newspapers, including USA Today, The Wall Street Journal and the Atlanta Journal-Constitution. More...

GMAC Gets $6 Billion From Treasury to Revive Lending

2008-12-30T06:46:00.000-08:00

Dec. 30 (Bloomberg) -- The U.S. Treasury committed $6 billion to support GMAC LLC, the financing arm of General Motors Corp., widening the government’s effort to keep the largest U.S. automaker out of bankruptcy.

The Treasury will purchase a $5 billion stake in GMAC and lend $1 billion to GM so the automaker can contribute to the lender’s reorganization as a bank holding company, according to a statement issued yesterday. The loan is in addition to $13.4 billion the Treasury agreed earlier this month to lend to GM and Chrysler LLC.

The fresh capital will enable GMAC to expand lending to car buyers and help save GM. The automaker’s U.S. sales plunged 22 percent this year through November after GMAC ran short on cash and limited loans to people with only the best credit. The Treasury stepped in after Congress failed to pass an auto- industry bailout earlier this month.

“The relationship with GM is probably a key reason it’s being bailed out,” said Thomas Atteberry, who helps manage $3.5 billion in fixed-income assets at First Pacific Advisors in Los Angeles. “Philosophically, I’m not very happy about the fact that the government has to save an auto-finance company because management ran it into the ground.”

In a statement, GMAC said it “intends to act quickly to resume automotive lending to a broader spectrum of customers to support the availability of credit to consumers and businesses for the purchase of automobiles.” The lender financed about 35 percent of GM’s retail customers last year.

New Rescue Program

“This is part of our strategy to position GMAC for long-term stability,” Toni Simonetti, a spokeswoman for GMAC, said about yesterday’s Treasury announcement. “The reason we’re doing this is so we can provide credit to consumers; we’ll put these funds to use right away.” More...

Autoworkers Union Keeps $6 Million Golf Course for Members at $33 Million Lakeside Retreat

2008-12-29T04:42:00.000-08:00

The United Auto Workers may be out of the hole now that President Bush has approved a $17 billion bailout of the U.S. auto industry, but the union isn't out of the bunker just yet.

Even as the industry struggles with massive losses, the UAW brass continue to own and operate a $33 million lakeside retreat in Michigan, complete with a $6.4 million designer golf course. And it's costing them millions each year....More

Mum Is the Word From GM and Chrysler-What is Next?

2008-12-28T06:09:00.000-08:00

Well the bailout drama is over for another week and there is no news coming from any of the Big Three. People have alot of questions and doubts,just about every plant for the Big Three are shut down. The big question is what plants will reopen and which will remain closed. GM and Chrysler have until March 31st to prove they can survive, which means cut,cut,cut...and still probably merge. 2009 will be a historical year for the American Automotive Companies. Who will survive? Who will Merge?

GMAC mum on whether it cleared bailout hurdle

2008-12-28T06:06:00.000-08:00

Kimberly S. Johnson / Associated Press

GRAND BLANC -- Even after a crucial deadline came and went, the financing arm of General Motors Corp. remained silent Saturday on whether it cleared a final hurdle to become a bank holding company and gain access to billions in federal bailout money.

Analysts have speculated that if GMAC Financial Services LLC doesn't obtain financial help it would have to file for bankruptcy protection or shut down, which would be a serious blow to parent GM's own chances for survival.

GMAC had received the Federal Reserve's approval to become a bank holding company earlier in the week, but the approval was contingent on the ailing auto and home loan provider completing a complicated debt-for-equity exchange by 11:59 p.m. EST Friday. ...More

Toyota forecasts first operating loss as sales slump

2008-12-22T06:16:00.000-08:00

Automotive News

NAGOYA, Japan (Reuters) -- Toyota Motor Corp. forecast a first-ever annual operating loss, blaming a relentless sales slide and a crippling rise in the yen while declaring an emergency unprecedented in its 70-year history.

The world's biggest automaker had been expected to issue its second profit warning in less than seven weeks after domestic rival Honda Motor Co. also cut its outlook again last week, but today's downward revision was bigger than analysts predicted.

"We are facing an unprecedented emergency," President Katsuaki Watanabe told a year-end news conference today. "This is a crisis unlike the crises of the past."

The forecast compounds the global automotive crisis and comes three days after General Motors and Chrysler LLC staved off bankruptcy through a U.S. pledge for $17.4 billion in emergency loans. Automakers around the world are caught in a sharp reversal of demand as the financial crisis spreads, squeezing credit and consumer sentiment.

Toyota cut its group operating forecast to a loss of 150 billion yen ($1.7 billion) for the year ending March 31, after shocking financial markets last month by slashing its group operating profit forecast by 1 trillion yen to 600 billion yen.

It made a record profit of 2.27 trillion yen last year....More

GM and Chrysler Will Get $13.4 Billion in U.S. Loans

2008-12-19T06:32:00.000-08:00

Dec. 19 (Bloomberg) -- General Motors Corp. and Chrysler LLC will get $13.4 billion in initial government loans to keep operating in exchange for a restructuring under a rescue plan announced by President George W. Bush.

A bankruptcy is unlikely to work for the automakers at this time and can’t be allowed, Bush said at the White House.

“These are not ordinary circumstances,” Bush said. “In the midst of a financial crisis and a recession, allowing the U.S. auto industry to collapse is not a responsible course of action.”

The money will be drawn from the Troubled Asset Relief Program and the automakers will get an additional $4 billion from the fund in February for a total of $17.4 billion in assistance, according to a statement from the Bush administration. The funds would allow GM and Chrysler to keep operating until March.

Winning the assistance is a reprieve for GM, the biggest U.S. automaker, and No. 3 Chrysler after they said they would run out of operating funds as soon as this month. Bush is stepping in after Senate Republicans’ refusal last week to take up a House-approved rescue raised the prospect of a company failure costing millions of jobs.
...More

Auto Rescue: Bush to Give Low-Interest Loans to Carmakers

2008-12-19T06:28:00.000-08:00

The White House has decided to come to the rescue of General Motors and Chrysler by providing them with $17.4 billion in low-interest loans to keep them afloat, ABC News has learned.

The money for the loans will come from the Troubled Asset Relief Program fund, signed into law this fall to bail out the financial industry. The president will provide $13.4 billion in short-term financing in December and January and plans to make another $4 billion available in February, provided it can reach into the second half of the $700 billion TARP fund to do so.

The deal also includes as a non-binding "target" a key provisions, including making work rules and wages competitive with workers at foreign car companies in the U.S.

Chrysler CEO Bob Nardelli issued a statement saying the company was grateful for the helping hand and that, "Chrysler is committed to meeting these requirements."

Pressure had been building for President Bush to act. Chrysler temporarily shut down all of its plants earlier this week to save money, and GM delayed construction on a new plant for the same reason. And House Speaker Nancy Pelosi urged Bush on Thursday to make a decision because the nation's weakened economy could not risk a massive wave of layoffs.

"This is a difficult time for a free-market person," Bush said Thursday. "Under ordinary circumstances, failed entities, failing entities should be allowed to fail. I have concluded these are not ordinary circumstances, for a lot of reasons... We got to the point where if a major institution were to fail, there is great likelihood that there'd be a ripple effect throughout the world, and the average person would be really hurt."

Treasury Secretary Henry Paulson told a business forum in New York Thursday night it was too risky to simply let the automakers fail.

"When you look at the size of this industry and look at all those that it touches in terms of suppliers and dealers… it would seem to be an imprudent risk to take," he said....More

Gm Chrysler merger-This is the End Of The Road For Chrysler

2008-12-18T03:18:00.000-08:00

GM Chrysler News reported this 2 months ago. The GM Chrysler Merger was and is a done deal! They just need some cash to buy out Daimler and then transfer the 49% of GMAC to Cerberus and GM will Get Chrysler's assets.

I find it amusing all these supposedly automotive experts are surprised that GM Chrysler is talking merger again. Both companies have told us 2 months ago they where going to merge. The only hold up was GM needed more cash! Well guess what, the money will be coming soon.

The auto rescue bridge loan was all part of the plan to facilitate the GM Chrysler Merger!

GM idled 22 factories and Chrysler idled 30,Sadly the workers at GM and Chrysler do not know that some of these plants will never open up again, Especially if the GM Chrysler Merger goes through.

GM Chrysler News-J.F.

Chrysler News-Chrysler to idle all plants!

2008-12-18T03:07:00.000-08:00

Carmaker moves to conserve cash, tightens lending to dealers

Alisa Priddle / The Detroit News

Chrysler LLC is shutting its North American production operations Friday for a month, the latest in a string of drastic cost-cutting measures it is making as it awaits word on emergency federal loans to prevent it from possibly having to file for bankruptcy.

The Auburn Hills automaker said the action is a response to a severe sales slump, tight credit and an urgent need to preserve cash. All 30 of the company's assembly, engine and transmission plants in the United States, Canada and Mexico will close at the end of their shifts Friday for at least 30 days, the company said.

Chrysler said people aren't buying vehicles because they can't get loans, but company dealers also have been hit by the tight credit market. Chrysler Financial has warned dealers that it may have to stop providing loans they need to stock their showrooms because dealers have been withdrawing too much money from an account used to fund the loans.

The production cuts come as Chrysler and General Motors Corp. seek up to $15 billion in emergency aid from the government to help them fund their operations for the rest of this year and into early 2009. Chrysler has asked for $7 billion in emergency loans and has warned that without the money, it could be forced to file for bankruptcy protection.

Chrysler's U.S. sales have slumped 27.7 percent this year and fell 47.1 percent in November, according to Autodata Corp.

"It's clear that the automakers are in a very fragile financial condition and they're taking steps to deal with it," White House spokeswoman Dana Perino said Wednesday. "We're aware of their financial situation and are considering possible policy options to provide assistance in an appropriate way. As we've said, a disorderly collapse of the auto industry should be avoided."

Chrysler spokeswoman Shawn Morgan said the issues aren't unique to Chrysler, which continues to restructure and invest in future products...More...

Is the Auto Rescue Loans In Limbo?

2008-12-17T04:15:00.000-08:00

WASHINGTON (AP) — Conservative Republicans admonished the White House Tuesday not to use bank-bailout billions to rescue distressed U.S. automakers, and a key Democrat demanded the government get veto power over the companies' business decisions as a condition of any aid.

The Bush administration said it was still evaluating options and suggested any deal would require major concessions by all sides. Complicating its task, lawmakers in both parties — having failed in their efforts to push a $14 billion auto rescue through a bailout-weary Congress — were pressing for an array of terms and conditions they said should be part of any Plan B.

"We are not going to be rushed into it," presidential press secretary Dana Perino declared.

Only a day earlier, President George W. Bush suggested that a rescue package would come sooner rather than later. "An abrupt bankruptcy for autos could be devastating for the economy," Bush said on Monday. "This will not be a long process because of the economic fragility of the autos."

Still, conservative Republican lawmakers, many from Southern states that are home to Japanese auto plants, wrote to Bush asking him not to use one of the most readily available pots of money — the $700 billion Wall Street rescue fund — to help the U.S. carmakers.

And the White House and Treasury Department were in talks with Sen. Bob Corker, R-Tenn., who has been pressing for big union concessions in exchange for rescue money, on the terms and structure of a possible bailout, said a senior GOP congressional aide.

Corker came close last week to striking a deal with the United Auto Workers union for a $14 billion bill that would have forced the carmakers to bring their wages and benefits in line with those of Japanese auto companies in the U.S. by a specific date in 2009. The measure collapsed after the UAW refused to agree to wage cuts that quickly. The new contacts with the administration were disclosed on condition of anonymity because the aide was not authorized to divulge them.

Rep. Barney Frank, D-Mass. weighed in as well, urging Treasury Secretary Henry Paulson to adopt the accountability provisions included in a House-passed auto bailout bill — the product of a deal with the White House — as a condition of any bridge loans to U.S. automakers. That measure would have given a Bush-appointed overseer say-so over any major business decisions by the automakers while they were taking advantage of federal aid, including the power to nix any transaction of $100 million or more.

"Given the serious mistakes that senior auto industry executives acknowledge they have made in the past, such safeguards are absolutely necessary to ensure that taxpayers are protected and that the retooling of this critical industry proceeds as quickly as possible," Frank wrote to Paulson on Tuesday.

GM and Chrysler have said they will run out of cash within weeks if they don't get help. Ford Motor Co. has said it has enough cash to survive 2009.

Perino said the administration was still working on details of the package, which could reach $15 billion for General Motors Corp. and Chrysler LLC.

She said concessions had to be made in exchange for the money.

"I don't think that there's any possible way that this president would agree to allow taxpayer financing to go toward firms that are not willing to make tough decisions to become viable and competitive in the future," she said.

Bush said Tuesday that his administration was "considering all options" for helping the automakers, arguing that the already distressed economy could slide further into recession without prompt action.

"What you don't want to do is spend a lot of taxpayers' money and then have the same old stuff happen again and again and again," Bush told CNN in an interview. At the same time, he said, "we're trying to get this done in an expeditious way."

The administration indicated it would extend a helping hand to the domestic automakers after an aid effort died in Congress late last week. The White House had wanted Congress to act.

The timing and details of Plan B — the Bush administration stepping in to help the automakers directly — remain in flux. In the absence of action, lawmakers were eagerly offering up their counsel, particularly on the idea of using the $700 billion financial industry rescue fund, known as the Troubled Asset Relief Program, to help U.S. automakers.

"Congress never voted for a federal bailout of the automobile industry, and the only way for TARP funds to be diverted to domestic automakers is with explicit congressional approval," wrote 26 GOP lawmakers, led by Rep. Jeb Hensarling of Texas.

Seven Senate Republicans led by Sen. Jim DeMint of South Carolina fired off a similar missive saying that without restructuring, "we do not believe any amount of money will succeed in saving these companies."...More

Will George Bush Require GM and Chrysler To Go Into bankruptcy?

2008-12-15T17:16:00.000-08:00

President Bush has said he would help GM and Chrysler with a auto Bridge loan, but what are the details?

I have read every article on the Internet and there are a thousand different variations.

Some are saying the loans will go through by tomorrow and follow the same Bill the House passed. Others are stating The treasury must really look at what the companies need.

I have read the Loans will be only $5 billion all the way to $40 Billion dollars.

An article on WSJ stated they spoke to a source close to the White House and Bush may require GM and Chrysler to go into bankruptcy to receive help!

From(Wall Street Journal)--Two people familiar with the situation said the government is also considering requiring any auto makers seeking aid to file for bankruptcy. Under such a scenario, the money would be used as so-called debtor-in-possession financing. Outside experts said such financing could require $50 billion or more for GM and Chrysler combined.

An article from Bloomberg states Bush wants to keep GM and Chrysler out of bankruptcy, Which is it?

An Article from (Bloomberg)-- President George W. Bush said deliberations by his administration on whether to tap a bank bailout fund to keep General Motors Corp. and Chrysler LLC out of bankruptcy “won’t be a long process” because of the “fragility” of the U.S. automakers

It's the old hurry up and wait....We will eventually find out.

Why Toyota wants GM to be saved

2008-12-15T17:10:00.000-08:00

A GM failure would cause production problems, crush already weak demand and potentially open the door to low-cost competitors.
NEW YORK (CNNMoney.com) -- Detroit's Big Three aren't the only automotive companies that want to see the government step in with some much needed financial help.

Overseas automakers, most notably Toyota Motor, all endorse some form of federal aid to keep General Motors (GM, Fortune 500), Chrysler LLC and possibly Ford Motor (F, Fortune 500) out of bankruptcy.

The Senate killed an effort to get the automakers a stopgap loan last week and now the Bush administration has said it is looking at providing the automakers help from the $700 billion approved to bailout banks and Wall Street firms.

"We support measures to help the industry," said Toyota Motor (TM) spokeswoman Mira Sleilati. "We just want a strong, competitive healthy industry."

This may seem surprising at first, especially when you consider that much of the opposition to the auto bailout was from senators from Southern states home to auto plants operated by Asian auto companies, such as Alabama and South Carolina. But the Asian automakers insist they never lobbied against such help for the Big Three.

And this makes sense once you take a closer look at the dynamics of the auto industry and how intertwined the fates of all the companies are.

Here's why Toyota, Honda Motor (HMC) and other Asian auto manufacturers clearly believe they are all better off with GM and Chrysler surviving than if they go out of business.

Collateral damage
The overseas automakers, who between them produce more than 3 million vehicles a year at U.S. plants, all worry their production would be hurt if one of the U.S. automakers went under. That's because a Big Three failure would likely lead to widespread bankruptcies in the auto parts supplier industry.

Erich Merkle, lead auto analyst with the consulting firm Crowe Horwath LLP, said there is much overlap between the automakers' suppliers. Since most parts in an automobile have only a single supplier producing them, the disruptions in production will be severe and prolonged.

"It could take months for a Toyota to work through that and resume normal production," he said.

Merkle said the current network of auto suppliers, manufacturers and dealerships have worked well for the overseas automakers, who have posted steady gains in their U.S. market share during the past few years.

Besides sharing suppliers, many dealers sell both U.S. and overseas brands. So the failure of a U.S. automaker could hurt the overseas manufacturers' dealer network and their sales as well, Merkle said.

"There would be a severe disturbance in the force," he quipped.

Economic shockwaves
A collapse of one of the Big Three would also probably cause an even more severe hit to the U.S. economy. That would further eat into demand for U.S. auto sales, which hit a 26-year low in November.

"The U.S. economy would be in shambles," Merkle said. "The robust U.S. economy that Toyota and the others depend on would suddenly not be as lucrative."

The overseas automakers agree that the last thing they need is for the U.S. economy to slow further. The U.S. is the largest market for Toyota, Honda and Nissan (NSANY). All are expected to report lower U.S. sales this year for the first time ever.

"We want to get the economy back," said Michael Stanton, CEO of the Association of International Automobile Manufacturers, which represents most of the Asian automakers with plants in the U.S. "Everyone is hurting at this level of sales. Everybody is either cutting back or shutting down."

The latest cutbacks came Monday when Toyota announced it was putting plans to open a new plant in Mississippi on hold indefinitely, even though it is about 90% complete. The plant was set to start building the first domestically produced Prius in 2011.

While the overseas automakers would be certain to eventually pick up more U.S. market share if a U.S. automaker stopped doing business, Merkle said the need to sell off the inventory of the failed automaker at fire sale prices would depress all prices in the industry in the short-term....More

White House considers auto bailout options

2008-12-15T17:04:00.000-08:00

WASHINGTON (AFP) — The White House said Monday it was studying options for a bailout of the US auto industry without indicating when an announcement would be made.

"We're reviewing automakers financial information, considering our policy options, and when we have something to announce, we'll announce it," said White House spokesman Tony Fratto.

He refused to "confirm or knock down or otherwise read out our contacts or deliberations, timing or substance."

The Big Three US automakers -- General Motors, Ford and Chrysler -- have warned that without a package of loans, millions of jobs could be lost, which would send ripple effects through the nation's already faltering economy.

President George W. Bush, who has hinted the government could tap a massive federal rescue package to aid the automakers, was Monday on his way back to Washington after surprise weekend visits to Iraq and Afghanistan.

His return could speed up a deal, after Bush said: "We're now in the process of working through with the stakeholders a way forward, and we're not quite ready to announce that yet.

He told reporters aboard Air Force One that "this will not be a long process because of ... the fragility of the autos."

Lawmakers have said time is running out for the auto giants, and traded blame with auto union chiefs over last week's collapse in the Senate of a short-term 14-billion dollar rescue bill.

The White House has now said it is ready to consider dipping into a 700-billion dollar Wall Street bailout agreed earlier this year to stimulate the economy and end a credit crunch.

But the Detroit Free Press newspaper reported that the size, scope and timing of any lifeline to the automakers was uncertain.

The White House was interested in two conditions, the paper said. The first was a steep reduction by creditors in automakers' debt, the second was requiring the United Auto Workers (UAW) union to take half the money due for a retiree health-care trust fund in stock, instead of in bonds or cash.

The Wall Street Journal reported Monday that the US government was planning a package of between 10 and 40 billion dollars.

According to the size of the deal, the administration may have to seek congressional approval, with the new Congress not set to meet again until January 6 with a boosted Democratic majority following the November 4 elections.

Republican Senator Bob Corker, who was the Senate's pointman for a series of adjustments to the House of Representatives' bailout bill, said the UAW must make pay adjustments.

"Every car they make, they're at a competitive disadvantage because they are disadvantaged by their labor costs," Corker said Sunday.

In turn, auto representatives accused Republicans of seeking to impose unfair wage cuts.

"We need this money ... this low-interest bridge loan to get us through an emergency situation here, an economic downturn," UAW chief Ron Gettelfinger told CNN, accusing Republicans of politicizing the issue by calling for US manufacturers to bring their pay in line with foreign automakers.

UAW says working to prevent "run" on GM, Chrysler

2008-12-14T04:56:00.002-08:00

By David Bailey

DETROIT (Reuters) - United Auto Workers President Ron Gettelfinger on Friday blamed Senate Republicans for the collapse of the auto bailout bill and said the union was ready to do its part to prevent creditors from forcing General Motors Corp or Chrysler LLC into bankruptcy.

"We're going to work tirelessly to make this happen and realize that there's going to have to be restructuring," Gettelfinger told reporters.

Gettelfinger said the key now is to prevent suppliers from stopping shipments to GM or Chrysler or demanding payment in cash up front -- a situation he likened to "a run on the bank."

"We need to satisfy the suppliers that there is going to be a tomorrow," he said.

Without immediate federal help now by the White House through the $700-billion fund for the banking system, GM will not be able to make it out of December, and Chrysler's own dire cash position is similar, he said.

"If we worked for nothing, it wouldn't help them limp into January," Gettelfinger said.

Senate negotiations over a $14 billion package to extend emergency loans to the auto industry broke down late Thursday. That came after the UAW balked at requirements from Senate Republicans that would have forced the union to agree to sweeping concessions on the spot.

"We wondered, quite frankly, if we were just being set up," Gettelfinger said.

The UAW has been a stalwart ally of the Democratic party and worked hard for the election of President-elect Barack Obama.

Gettelfinger said some Republicans, particularly from southern states like Alabama, saw the bailout negotiations as a way to cripple the union while aiding the Japanese, South Korean and German automakers that have located plants and supply operations in their home districts.

"They thought perhaps they could have a twofer here maybe -- pierce the heart of organized labor while representing the foreign brands," he said....More

UAW says working to prevent "run" on GM, Chrysler

2008-12-14T04:56:00.001-08:00

UAW says working to prevent "run" on GM, Chrysler

2008-12-14T04:56:00.000-08:00

White House mulling TARP funds for automakers

2008-12-14T04:54:00.002-08:00

Harry Stoffer
Automotive News

WASHINGTON -- The Bush administration, signaling a possible shift in policy, will consider using money set aside for the rescue of financial institutions to make emergency loans to automakers, the White House said this morning.

The word comes in the aftermath of stunning rejection by the Senate last night of legislation to provide $14 billion in emergency loans to prevent the collapse of General Motors and Chrysler LLC.

President Bush and his appointees have resisted using any of $700 billion approved in October for financial institutions to provide industry help under the Troubled Asset Relief Program, or TARP. Democrats contend the failure of one or more automakers would have widespread devastating economic effects.

It's unclear when the White House or U.S. Treasury will make a decision about using TARP funds for the auto bailout.

Of the first $350 billion in the TARP fund, about $15 billion has not yet been committed, wire services reported this morning.

That happens to be the amount GM and Chrysler say they need to survive to the end of the first quarter of 2009.

To access the second $350 billion, the administration must seek fresh approval from Congress.

U.S. Sen. Carl Levin, D-Mich., said the effort to provide the emergency bridge loans remains "very much alive."

"I am encouraged that the White House said today that they will consider other options to assist the auto companies, including use of the TARP program," Levin said in a statement.

"Use of TARP funds is the fastest, most feasible, most immediate and most certain approach to provide the emergency bridge loans needed by the auto companies....More

White House mulling TARP funds for automakers

2008-12-14T04:54:00.001-08:00

White House mulling TARP funds for automakers

2008-12-14T04:54:00.000-08:00

Chrysler purchasing boss Campi leaves

2008-12-14T04:52:00.002-08:00

Robert Sherefkin
and Bradford Wernle
Automotive News

DETROIT -- Chrysler LLC purchasing chief John Campi told suppliers this afternoon that today is his last official day on the job. He said he was leaving because of health reasons.

Chrysler named Scott Garberding, 44, to replace Campi, 64. Garberding joined Chrysler in 1996. His most recent title was vice president of global alliance operations.

Campi joined Chrysler in January and immediately signaled a change of direction in purchasing policy. He said Chrysler needed to buy more components from low-cost countries, particularly in Asia.

He promised to collaborate, but during his tenure, Chrysler repeatedly sued suppliers over contract disputes.

Campi was a trusted ally of Chrysler CEO Bob Nardelli during Nardelli's previous tenure as chairman of retailer Home Depot Inc., where he also was purchasing chief.

Chrysler purchasing boss Campi leaves

2008-12-14T04:52:00.001-08:00