GM in preliminary talks to buy Chrysler: source

(This does not surprise me. Probably GM and Ford would be in a better position had Chrysler been allowed tp go bankrupt or merge when Lee Iacocca was at the reigns. But look for GM and Ford to merge once the Chinese imports gain their share of the U.S. market.)

Fri Feb 16, 2007 - General Motors Corp. is in preliminary talks to buy Chrysler, the struggling U.S. arm of DaimlerChrysler AG, a source familiar with the situation said on Friday.

The talks, described by the source as exploratory, were first reported on Friday by the trade journal Automotive News. GM and Chrysler parent DaimlerChrysler declined to comment. Shares of DaimlerChrysler rose in reaction to reports of the talks. GM shares slipped at first but then moved higher.

Automotive News, citing unnamed sources in Germany and the United States, said the companies were engaged in high-level talks about GM buying Chrysler Group, which sells Chrysler, Dodge and Jeep vehicles, in its entirety. The source who spoke to Reuters said it was questionable whether GM would want Chrysler's finance business, having sold its own finance arm, GMAC, last year.

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Chrysler stock jumps after report that it's talking to GM
U.S. shares of DaimlerChrysler AG jumped more than 4 percent Friday – setting a new 52-week high – after a trade publication reported that General Motors Corp. is in talks to acquire the troubled Chrysler Group.

GM and Chrysler officials would not comment on the report by Automotive News, which attributed the story to people in Germany and the U.S. whom it did not identify. Several industry analysts said the speculation drove DaimlerChrysler stock up. Its shares closed up $3.08, or 4.4 percent, to $73.33 on the New York Stock Exchange. Earlier in the session, it set a new 52-week high of $74.53.

GM's shares slipped 10 cents to $36.34, after rising earlier to $36.83. Spokesmen for both GM and Chrysler said they would not comment because so many rumors have surfaced since Wednesday, when DaimlerChrysler Chairman Dieter Zetsche said the automaker would not rule out possible sale of its U.S. operations, which it acquired in 1998.

The DaimlerChrysler chairman, who formerly led Chrysler Group, said the German company is considering all options for its U.S. operation, including strategic partners. “It's the rumor of the day, or the week,” Chrysler Group spokesman Mike Aberlich said of the GM report. “It's just speculation and we're not going to comment on speculation.” But neither company would deny that talks were taking place, either.

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[Martin]

With all the competition out there from other countries...im not surprised..

Now why would they want to buy cars that catch fire?...

Reports of fires leads to big Chrysler recall
Liberty, Durango models among nearly 500,000 vehicles that are affected
March 9, 2007

After dozens of reports of fires in Dodge Durango and Jeep Liberty sport utility vehicles, DaimlerChrysler AG’s Chrysler Group recalled nearly 500,000 vehicles Friday. Chrysler said it had received 66 reports of fires in Dodge Durango SUVs from the 2004-2006 model years because of electrical overloads in the driver’s side instrument panel below the dashboard. The automaker said it was recalling 328,424 Durangos.

The automaker was also recalling 149,605 Jeep Liberty SUVs from the 2006-2007 model years to fix the heating-ventilation-air conditioning blower motor. Chrysler had received a dozen reports of fires from Liberty owners. In a third move, Chrysler said it was recalling nearly 11,000 Dodge Avenger passenger cars from the 2008 model year to fix problems with the front driver and passenger side door latches.

There were no crashes or injuries reported in connection to the recalls, Chrysler said. The National Highway Traffic Safety Administration had opened defect investigations involving the Durango and Liberty.

More http://www.msnbc.msn.com/id/17539876/

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Analysts say GM may report a profit
Not predicted to be large amount in delayed fourth-quarter earnings
March 9, 2007

General Motors Corp. says it will do something next week that’s a rarity these days for U.S.-based automakers: report a profit. GM in January predicted a fourth-quarter net profit when it announced that accounting troubles would delay its quarterly and full-year financial results.

Analysts don’t expect the profit to be huge, but say it’s a sign that GM’s restructuring plan, or at least its massive cost cuts, is beginning to take hold. The world’s largest automaker, which reported losing $3 billion through the first nine months of last year and $10.6 billion in 2005, says it will report net income for the first quarter in two years when it announces its fourth-quarter and full-year 2006 results sometime next week.

The company won’t predict full-year figures. A dozen analysts polled by Thomson Financial expect GM to say it earned $1.19-per-share excluding restructuring costs and other special items for the fourth quarter. For the full year, 10 of the analysts expect earnings of $4.39 per share, again excluding billions of dollars in restructuring costs that will likely leave it with a net loss.

More http://www.msnbc.msn.com/id/17541684/

[waltky]

Wrong time for GM to get hit by UAW strike...

China set to produce 8.5 million autos in 2007
23 Sep 2007, China is expected to produce 8.5 million automobiles in 2007 and the booming auto industry's contribution to the GDP is also rising, a top economic planner has said.

By the end of 2006, output value of China's auto industry accounted for 3.7 per cent of China's gross domestic production (GDP), vice minister of National Development and Reform Commission, Zhang Guobao said. Meanwhile, employment in auto and auto-related industries accounted for one-sixth of the nation's total workforce, he was quoted as saying by Xinhua news agency. In 2006, China's auto output and sales increased by 22 per cent and 23 per cent to 4.5 million and 4.4 million units respectively.

China produced 5.75 million motor vehicles in the first eight months of this year, up 23.6 per cent over the same period last year, according to the China Association of Automobile Manufacturers. Official statistics show that China exported 294,000 autos in the first seven months this year, up 70.3 per cent from the corresponding period last year. Auto exports may exceed 500,000 units for the whole year.

China's auto industry has developed vigorously to withstand challenges posed by the country's entry into the WTO in 2001 and even overtook Japan to become the world's No.2 auto market. China's auto industry was able to withstand the pressures due to three factors: the country's sound economic environment, its solid industrial foundation and sharpened competitive edge in the global market for improved product quality, industry experts said.

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GM hit by nationwide strike
September 24 2007: Marathon bargaining session fails to produce deal as 73,000 UAW members start strike; talks said to continue.

The United Auto Workers union launched a nationwide strike against General Motors on Monday as 73,000 UAW members started walking off the job and hitting the picket lines at the nation's largest automaker. UAW President Ron Gettelfinger blasted GM management, saying that the company had not been willing to meet the union part way in negotiations.

"This is nothing we wanted," he said about the strike. "No one benefits in a strike. But there comes a point where someone can push you off a cliff. That's what happened here." Union leaders said they were willing to resume negotiations early Monday afternoon, several hours after the strike started at 11 a.m. Gettelfinger said the union was ready to discuss the company's key bargaining goal of shifting an estimated $51 billion in health care expenses for retirees and their family members to union-controlled trust funds. But he said that other issues had derailed hopes of an agreement.

The union president said he was looking for assurances from the company about the job security of its members, specifically the level of investment in U.S. plants and promises that production of future vehicles would be given to U.S. facilities, rather than those outside the United States that do not use UAW members. Most GM dealers won't start to see shortages of vehicles for two to three weeks, even though the strike will immediately halt production of 12,200 vehicles per day or 760 vehicles per hour, said Michael Robinet, vice president of global vehicle forecasts for CSM Worldwide. GM's inventory is above those of Japanese rivals and U.S. sales have been soft in recent months following the subprime mortgage meltdown.

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[waltky]

GM gonna take a big hit...

GM to take $39 billion charge in third quarter
6 Nov. 2007 - Earnings to be released Wednesday will take huge hit

General Motors Corp. said Tuesday it will record a $39 billion net noncash charge for the third quarter because of negative changes in its historical three-year cumulative loss. The charge means that GM will report a huge net loss for the third quarter when it releases its earnings Wednesday morning, an industry analyst said. “The bottom-line net loss for the quarter will be somewhere south of $39 billion because this is a net charge that they’ve taken against their deferred assets,” said Burnham Securities analyst David Healy.

GM spokeswoman Julie Gibson said the company would not state its earnings until Wednesday. “It does not affect our cash liquidity position, our ability to operate and make investments, or our outlook on the company’s future, which remains positive,” she said. The charge is related to establishing a valuation allowance against deferred tax assets in the U.S., Canada and Germany, the company said in a statement.

GM had determined in the past that a valuation allowance was not necessary for deferred tax assets in the three countries, the statement said. But because of recent events and developments in the third quarter, GM must establish the allowance under accounting guidelines. “In this quarter, due to some events that happened during the quarter, we had to take the valuation against deferred assets,” said spokeswoman Rene Rashid-Merem.

More GM to take $39 billion charge in third quarter - Automotive - MSNBC.com

[waltky]

Auto industry takin' a beating...

General Motors stock sinks
November 19 2007: The automaker's shares are at their lowest level in 17 months as residential mortgage losses outweigh auto loan profitability.

Deepening concerns about deteriorating credit-market conditions helped send shares of General Motors Corp. to their lowest level in about 17 months on Monday. The automaker, in the midst of a restructuring aimed at restoring profitability, has been stung in recent months by the weak performance at GMAC Financial Services, which has struggled due to losses at its residential-mortgage business even as auto loans continue to be profitable.

News on Monday that Goldman Sachs had downgraded shares of Citigroup Inc. to sell, citing concerns of more write-downs for the bank and mortgage-related exposures, revived concerns that the crisis could worsen for companies that have links to the mortgage market. Adding fuel to the fire for GM investors, Lehman Brothers analyst Brian Johnson said in a research note Monday that GMAC is experiencing a "sharp" increase in delinquency rates among its auto-loan customers since July.

"The precursor of credit loss is delinquency - and the 60-day delinquency rate is on the rise for recent issues of GMAC auto (asset-backed securities)," Johnson said. He noted that, with unemployment low, "the deterioration in auto ABS credit conditions may be evidence of a likely spill-over of the mortgage woes onto the auto credit world." GMAC spokeswoman Gina Proia said the company saw a "small to modest uptick in (auto loan) delinquencies" in the third quarter, but said credit trends remain consistent and that GMAC is closely monitoring the portfolio.

"We have taken some steps such as reducing the production of non-prime loans in auto finance. We have also expanded the collection force and we have placed an increased emphasis on the initial verification of applicants, especially those in the lower tier," Proia added. Shares of GM (Charts, Fortune 500) traded as low as $26.57 Monday, the lowest level since June 20, 2006. The shares fell $2.48, or 8.5 percent, Monday to close at $26.79. The stock is down 38 percent from its 52-week high of $43.20 posted on Oct. 12.

GM's $39B loss a record

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Auto Sales Could Hit 15-Year Low
Nov 19, 2007 - The Crumbling U.S. Housing Market is Spooking Consumers Away From Big Purchases

Three top investors in the automotive industry painted a grim picture on Sunday for the sector in 2008, with one executive predicting a possible slump in U.S. sales to levels not seen in 15 years. The weakest forecast is for a possible 9.4 percent decline. But all three -- Jerry York, an adviser to billionaire investor Kirk Kerkorian; financier Wilbur Ross; and Thomas Stallkamp, a former Chrysler president -- were more pessimistic than many in the battered industry.

"While I am very negative on the autos sector over the next 12 to 18 months, I'm just not sure how bad it could be," York, a former board member of General Motors Corp and chief financial officer of Chrysler, said at the Reuters Autos Summit in Detroit. "We all know housing is a debacle." U.S. light auto sales could slip to 15.5 million or less next year, York said. That would be down from near 16 million this year, a drop of 3 percent to mark the second consecutive annual decline and the lowest tally since 1998.

Stallkamp, a partner at private equity firm Ripplewood Holdings, which owns several auto parts makers, said the market could slump to 14.5 million, the lowest level since 1993. "I'd say it's somewhere between 14.5 (million) and 15 (million), somewhere in there and it's hard to tell," he said. "Today, I'm a little more towards 14.5 (million)."

Such a decline would be felt throughout the sector, CSM Worldwide auto analyst Michael Robinet said. "That would certainly be one of the worst years on record given the gravity of the industry," he said. U.S. auto sales fell almost 11 percent in 1991, when the economy was in recession.

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[waltky]

GM to lay off 3,500...

GM to cut truck shifts, leading to layoffs
Mon., April. 28, 2008 - High gas prices, slump in housing hold back automaker’s sales

Sagging pickup truck and sport utility vehicle sales have forced General Motors Corp. to shut down one shift each at four North American factories and lay off about 3,500 workers. The world’s largest automaker by sales said Monday that the cuts, to take effect starting this summer, were brought on by weak demand due to high gasoline prices and an economic downturn. The cuts will affect pickup factories in Pontiac and Flint, Mich., and Oshawa, Ontario, as well as the full-size SUV plant in Janesville, Wis. The layoffs represent just over 4 percent of GM’s hourly manufacturing work force of about 80,000 in North America.

The company said the cuts mean it will make about 88,000 fewer pickups and 50,000 fewer large SUVs this calendar year. GM said the exact number of layoffs will be worked out with its unions. Workers will get unemployment benefits and supplemental pay that total 80 percent of their normal 40-hour gross pay, said GM spokesman Dan Flores.

“With rising fuel prices, a softening economy and a downward trend on current and future market demand for full-size trucks, a significant adjustment was needed to align our production with market realities,” GM North America President Troy Clarke said in a statement. For about the past three years, the U.S. auto market has been shifting away from pickup trucks and SUVs to cars and crossover vehicles, but the trend accelerated in recent months due to gas prices that have topped $3.50 per gallon across the nation.

More GM to cut truck shifts, leading to layoffs - Autos - MSNBC.com

[waltky]

GM still losin' money...

GM's Gas Pains, Loses $3.3B in 1st Quarter
April 30, 2008 - Weak Sales of Gas Guzzlers Contribute to Huge Loss

General Motors Corp. struggled to a $3.3 billion first-quarter loss, due in part to a weak U.S. market, a strike at a major supplier and plummeting sales of sport utility vehicles and pickups. The loss reported Wednesday for the January-March period, which amounted to $5.74 per share, also reflected one-time charges. It compares with a profit of $62 million, or 11 cents per share, in the first quarter of 2007. GM said a two-month strike at American Axle and Manufacturing Holdings Inc. has cost it $800 million and 100,000 vehicles. The strike has affected 30 GM plants.

GM's loss included a $1.45 billion charge to reflect a change in the value of GM's interest in GMAC Financial Services and $731 million to increase GM's liability in Delphi Corp.'s ongoing bankruptcy. Excluding the one-time items, GM lost $350 million, or 62 cents per share, beating Wall Street's expectations. Analysts surveyed by Thomson Financial had expected a loss of $1.60 per share.

Ray Young, GM's executive vice president and chief financial officer, said analysts may be underestimating GM's overseas growth. He also said GM is making progress in cutting costs in North America. "The North American turnaround is occurring," he said. GM's total revenue for the quarter was $42.7 billion, down from $43.4 billion a year ago. GM said revenues were up 20 percent outside North America thanks to strong growth in China, Russia, Brazil and India, but were impacted by the slowdown in North America and losses at GMAC.

GM lost $276 million in the first quarter due to its minority stake in GMAC. GM lost $812 million in North America, compared with a loss of $208 million in the year-ago quarter. "We continue to leverage our global product portfolio to take advantage of tremendous growth in key emerging markets, while at the same time taking the appropriate actions to deal with the challenging economic conditions in the U.S.," GM Chairman and Chief Executive Officer Rick Wagoner said in a statement.

ABC News: GM's Gas Pains, Loses $3.3B in 1st Quarter

[waltky]

GM takin' it on the chin...

GM touches near 54-year low
June 30, 2008: The automaker is expected to report dismal June sales as demand for full-size vehicles falls amid record high gas prices.

Shares of General Motors fell Monday, at one point trading at their lowest level since 1954, on the eve of what's expected to be a dismal report on June vehicle sales. GM stock was down 11 cents to $11.44 a share in afternoon trading, after hitting a low of $10.57 earlier in the session. That was the lowest level for the company's stock since Sept. 22, 1954, when it traded at $10.49 on a split-adjusted basis, according to data from the University of Chicago's Center for Research in Security Prices. So far this year, shares of the nation's largest automaker have lost half their value.

Last week, GM shares tumbled after Goldman Sachs analysts downgraded the company to "Sell" from "Neutral" and cut their six-month price target to $11 from $19. The automaker is set to announce its June sales numbers Tuesday and the outlook is grim. "People are expecting bad news," said David Healy, an auto industry analyst at Burnham Securities Inc. "For the industry as a whole, we're expecting the weakest month in years," he said. Sales of full-size vehicles like trucks and SUVs, which were GM's most profitable products until recently, have declined dramatically as gas prices have soared.

The national average price for a gallon of regular gas has reached an all-time high of $4.086, according to a daily survey by motorist group AAA released Monday. In addition to falling demand for some of their flagship products, GM is also facing higher input costs as the price for raw materials like steel and other metals have risen. What's more, labor disputes earlier this year have caused significant delays in GM's production schedule. "People are beginning to realize the size of the losses they [GM] will take this year," Healy said.

But GM has plans to change its product line so that it can take advantage of rising demand for smaller, more fuel-efficient cars. Eighteen of the nineteen new vehicles GM is working on will be cars or crossover SUVs. And the company is developing a plug-in hybrid vehicle, the Chevrolet Volt, that can run about 40 miles without any use of gasoline. "They are adjusting their sales mix as quickly as the can, but in the meantime sales will be bad," Healy said.

Source

[waltky]

GM on the ropes...

GM may cut thousands more jobs
July 14, 2008: In an announcement Tuesday, the ailing U.S. automaker is expected to cut production and jobs due to falling domestic sales.

General Motors Corp. is expected to cut several thousand salaried jobs and further slash truck production in response to falling U.S. sales and Wall Street's demands for more action to stem its losses, according to people briefed on the plan. GM Chairman and CEO Rick Wagoner is scheduled to discuss the changes at a news conference Tuesday morning. GM released no further details, but salaried job cuts and cuts to benefits and executive compensation are likely.

The people briefed on the plan say GM will further reduce its truck production to focus more on small cars, and also will likely detail plans to raise more cash to fund its restructuring. The people requested anonymity because the plan was not yet public.

GM has been hammered by high gas prices, the weak economy and a rapid shift in consumer tastes away from trucks and sport utility vehicles. The automaker's sales were down 16% in the first six months of this year, while its stock price has hit 50-year lows in recent weeks. GM announced last month it would close four truck and SUV plants and boost production of several cars. But analysts have suggested the company needs to do more as sales continue to slide, including cutting more jobs and raising cash for a turnaround.

Source