General Motors could close Saab next week

The latest word from General Motors Corp. in Detroit is that it could close its Saab Automobile subsidiary next week if it cannot find a new buyer after a reported deal to sell the legendary company collapsed. The troubled U.S. automaker said today that its board would meet next week to decide the fate of the 70-year-old Swedish automaker, which it bought in two parts in 1990 and 2000, according to the New York Times. GM could be forced to close the 4,000-employee company because Swedish exotic car maker Koenigsegg unexpectedly pulled out of the deal Tuesday. Koenigsegg issued a statement blaming the collapse on GM taking too long to close the deal. “The time factor has always been critical for our strategy to breathe new life into the company,” Koenigsegg said. “Unfortunately, delays in closing this acquisition have resulted in risks and uncertainties that prevent us from successfully implementing the new Saab business plan.” GM appeared surprised by Koeinsgegg's decision, Reuters said. “We negotiated in good faith and we met all our timing obligations under the agreement,” said a G.M. spokeswoman, Renee Rashid-Merem. GM chief executive Fritz Henderson said he was "very disappointed" by the failure of the Saab deal. But Henderson should not have been surprised. It is the third time in the past two months that a GM brand sale was scuttled at the last minute. Its proposed sale of its Saturn brand to Penske Automotive Group collapsed just before it was final in September, and GM pulled out of a deal to sell its Opel operations in Europe last month. GM is being forced to sell off some of its parts as it reorganizes under bankruptcy court protection.

General Motors emerges from bankruptcy after crash diet

The rich elite in the United States must be different from ordinary folks. How else to explain the behind-the-scenes maneuvering that brought the largest U.S. automaker, General Motors, out of bankruptcy in a lightning-quick six weeks and lighter by tens of billions of dollars in debt. With the completion of the sale of assets Friday to a company set up solely to liquidate them under bankruptcy court supervision, GM returns to the competitive world of automobile designing, building, servicing and selling -- largely under the same management that led the company's decline, according to Cable News Network (CNN). Of course, there'll be some major differences -- GM is now more than 60 percent owned by the U.S. Treasury. In addition, by the end of next year, the new GM will also be lighter by tens of thousands of jobs and thousands of dealerships across the country. "This is an exciting day for General Motors, one that will allow every employee, including me, to get back to the business of designing, building and selling great cars and trucks and serving the needs of our customers," GM Chief Executive Fritz Henderson said, CNN reported. "We deeply appreciate the support we've received. We'll work hard to repay the trust, and the money, that so many have invested in GM." But Henderson, who took over the top spot at GM after the Obama administration forced out then-CEO Rick Wagoner as a condition of loaning the automaker as much as $50 billion, faces a daunting challenge. GM lost most of its market share, now 20 percent of the U.S. market, in the last few decades, was overtaken by Toyota Motor Co. of Japan as the world's largest automaker, and even lost its standing as a component of the Dow Jones Industrial Average. GM also will be losing its Saturn, Saab and Hummer brands, and previously decided to drop Pontiac. Henderson even said that he didn't know if GM would be able to repay the billions it borrowed from the treasury, according to CNN, but probably wouldn't have to borrow more next year. "This is a precious second chance," he said. "There are no third chances." Even if there were, who could afford them? GM has lost $88 billion since 2005 while its debt rose to $54 billion, CNN said. Bondholders who loaned money to GM before the bankruptcy will end up with around 10 percent of the new company, CNN said, but shares will not traded until next year at the earliest.

Industry experts fear GM still stuck in same gear

Nice to hear that automobile industry experts have begun to question General Motors' decision to choose a longtime veteran insider to run the largest U.S. automaker after the federal government made removal of the old CEO a condition of extending billions of dollars in loans. Cable News Network (CNN) said today that "many" industry experts are questioning whether 25-year GM insider Fritz Henderson is the right person to make the major changes needed to turn the largely moribund carmaker around, an issue raised here three months ago. Like the Ford Motor Co. and bankrupt Chrysler Corp., GM has been unable to build fuel-efficient vehicles that could compete on quality with rival Japanese automakers Toyota and Honda, even more than 30 years after the first OPEC oil embargo heralded a sea change in world fuel supplies. GM filed for bankruptcy protection at the urging of the Obama administration on June 1. "The removal of managers and executives has been mainly at lower levels, thinning ranks and taking out layers. It's not replacing people who made the mess and created the culture," said former GM market research and planning executive Rob Kleinman. Now managing director of consulting firm RAK & Co., Kleinman said what GM needs now is a management overhaul if it is to return to profitability. "Most successful turnarounds have been led by outsiders," he said. "The fact that Fritz [Henderson] seems dedicated to keeping the management team in place makes me extremely uncomfortable." In fact, GM's domestic rivals are being run by former industry outsiders, with Ford hiring Alan Mulally from Boeing in 2004 and Chrysler now headed by Fiat CEO Sergio Machionne, who was not in the industry when he was hired by the Italian carmaker in 2004, Reuters said. "You need some fresh blood in there," said industry analyst and consultant Erich Merkle. "The culture is not one that fosters speed, especially speed to market." But Henderson insisted Fortune magazine that he can bring about the necessary changes, CNN said. "I know the industry inside and out; I know the industry well," he told the magazine. "I think that does bring some experiences that can be very helpful in terms of change because I know what needs to be changed." And David Cole, chairman of the Center for Automotive Research, called Henderson a "high-speed decision-maker" who already has made important changes in GM's executive culture, CNN said. But Kleinman said GM was suffering from being out-of-touch with consumers and a decided lack of accountability, things a corporate insider would be unlikely to be able to fix.

General Motors is already bankrupt every way but legally

News that General Motors told the Treasury Department this week that it could seek bankruptcy protection comes as a surprise to no one, except maybe the federal regulators who have been propping up the auto giant with billions of dollars in taxpayer money since last year. The admission, the first time GM has openly discussed a bankruptcy filing, appeared in a regulatory filing about its restructuring progam, according to the Reuters international news service. Of course, new GM chief executive Fritz Henderson, who took over the top spot after the Obama administration demanded the removal of former CEO Rick Wagoner, mentioned the possibility earlier in the week after its proposed restructuring plan was rejected by the government. In its report to Treasury, GM said it was trying to restructure out of court but would file bankruptcy if it was unable to reach cost-saving agreements with its bondholders and employee unions. "If the changes needed for long-term restructuring cannot be obtained out of court, the company is prepared and would consider in-court options,” GM said in its filing. The United States has loaned the automaker billions of dollars in an effort to help it recover from the economic downturn, and also has suggested guaranteeing warranties and aiding GM in emerging from bankruptcy after restructuring. But if what GM really wants is to get out of its labor contracts while stalling on new car development and continuing to overpay its executives, maybe it really should get out of the way and let emerging automakers with better ideas take over.