Ford, GM and Chrysler have publicly released their business plans that have been submitted to the U.S. Government in order to seek financial aid. While Ford seems to have enough cash on hand to survive a dark-looking 2009 sales year, GM and Chrysler need extra funding immediately.
In the document, General Motors admits having made mistakes in the past, without pinpointing them out, but they have a turnaround plan that accelerates GM's shift towards smaller and greener vehicles.
Need money right now
The ailing manufacturer is asking for a $4 billion loan to get through December 2008 and another $6 billion to get them through the first quarter of 2009. They are also asking for a term loan and credits for up to $18 billion to ensure that they have enough liquidity for the rest of the 2009 calendar year.
If all goes well, GM expects to fully reimburse the proposed government aid by the end of 2012.
For the consumer, the company assures that outstanding vehicle warranties will continue to be covered. For the employees, GM will rearrange wages, healthcare coverage and other benefits down to the levels currently established by foreign manufacturers such as Toyota. In the last 15 years, General Motors spent $103 billion in healthcare and retirement pensions.
With the U.S. financial crisis, GM's financial arm, GMAC, is unable to support GM retail sales. Last year, GMAC could support almost 50% of the company's retail sales, but right now, it can only support 6%. Half the American population is unable to lease or finance a GM vehicle through GMAC because of their low credit scores. A reorganization is planned to solve the problem.
Cost-cutting measures
When the three domestic automakers met with the U.S. Government last month in Washington, they used their private jets to get there and got severely criticized for it. In the turnaround plan, GM will immediately cease all aircraft operations.
Rick Wagoner, Chairman and CEO, will reduce his salary to $1 in 2009, and won't receive an annual bonus for 2008 or 2009. Members of GM's board of directors as well as the four most senior officers within the company also get revenue cuts.
As for shareholders, dividends on GM Common stock are suspended for as long as GM uses the Government's financial aid.
In the document, General Motors admits having made mistakes in the past, without pinpointing them out, but they have a turnaround plan that accelerates GM's shift towards smaller and greener vehicles.
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| Rick Wagoner, Chairman and CEO |
Need money right now
The ailing manufacturer is asking for a $4 billion loan to get through December 2008 and another $6 billion to get them through the first quarter of 2009. They are also asking for a term loan and credits for up to $18 billion to ensure that they have enough liquidity for the rest of the 2009 calendar year.
If all goes well, GM expects to fully reimburse the proposed government aid by the end of 2012.
For the consumer, the company assures that outstanding vehicle warranties will continue to be covered. For the employees, GM will rearrange wages, healthcare coverage and other benefits down to the levels currently established by foreign manufacturers such as Toyota. In the last 15 years, General Motors spent $103 billion in healthcare and retirement pensions.
With the U.S. financial crisis, GM's financial arm, GMAC, is unable to support GM retail sales. Last year, GMAC could support almost 50% of the company's retail sales, but right now, it can only support 6%. Half the American population is unable to lease or finance a GM vehicle through GMAC because of their low credit scores. A reorganization is planned to solve the problem.
Cost-cutting measures
When the three domestic automakers met with the U.S. Government last month in Washington, they used their private jets to get there and got severely criticized for it. In the turnaround plan, GM will immediately cease all aircraft operations.
Rick Wagoner, Chairman and CEO, will reduce his salary to $1 in 2009, and won't receive an annual bonus for 2008 or 2009. Members of GM's board of directors as well as the four most senior officers within the company also get revenue cuts.
As for shareholders, dividends on GM Common stock are suspended for as long as GM uses the Government's financial aid.