(Source: Wall Street Journal)

 The biggest hurdle to the historic sale of General Motors Corp.’s Hummer brand to a little-known Chinese manufacturer of dump trucks and industrial machinery may be receiving Beijing’s seal of approval.

The Obama administration has already expressed strong support for the proposed sale to Tengzhong Heavy Industrial Machinery Co. But before it can buy Hummer, Tengzhong, based in Sichuan province, needs support from three different Chinese government agencies governing overseas investment, economic planning and China’s tight controls on foreign exchange.

China’s economic planning agency will have to weigh the Sichuan-based company’s desire to buy the company against its policies to encourage more fuel-efficient vehicles and automobile-industry consolidation.

Meanwhile, a visit to Tengzhong’s facilities, where workers make small batches of machinery parts at a time, highlight questions about the company’s technical readiness to manufacture a complex passenger vehicle — especially if some manufacturing of the vehicles eventually shifts to China, as is “logical” if the bid succeeds, a person familiar with the situation said.

Normally, China’s high-profile outbound investments involve government ministries at every step of the process, because the buyers are owned by the central government. Tengzhong, however, is privately held, with few assets and no experience in commercial automobiles.

“There aren’t many precedents for this transaction,” says Jeanette Chan, a partner at law firm Paul Weiss in Hong Kong.

She notes new rules that came into effect May 1 require a number of approvals before Tengzhong and GM can sign a binding agreement. The rules stipulate that overseas investments of more than $100 million require central government approvals, while provincial governments can sign off on smaller deals.

Central government agencies expected to review the deal include the Ministry of Commerce, the National Development and Reform Commission and the State Administration of Foreign Exchange. Of these, the commerce ministry’s approval is most important; if its approval process runs smoothly, it will take at least 30 working days, Ms. Chan said.

While the company appears to have ties in the local government, that won’t likely translate to any clout on the national level. On Wednesday, Tengzhong’s CEO Yang Yi said the company was “in the middle of the approval process.”

Key criteria include whether the company will be able to fund the purchase and succeed in developing the business. Tengzhong hasn’t released information about its finances, but it appears to be relatively small. Analysts expect Tengzhong to pay $200 million to $300 million for Hummer.

Click here to read the entire article.

(Source: CNNMoney.com)

President Obama to address nation.

General Motors, the nation’s largest automaker and for decades an icon of American manufacturing, stood Sunday on the brink of bankruptcy and a de facto government takeover.

Image Courtesy: CNN Money

A bankruptcy petition will be filed on Monday at 8 a.m., according to a source with direct knowledge of the bankruptcy proceedings.

Investors who own 54% of $27 billion in GM bonds have agreed to not fight plans for a quick bankruptcy process, GM said on Sunday.

The deal with bondholders could make it easier for GM to restructure by neutralizing some of the opposition to a bankruptcy filing. But it does not wipe away the need for the company to seek court protection for making drastic reductions in dealer, labor and other costs.

President Obama will address the nation shortly before noon on Monday to discuss the bankruptcy, two officials close to the situation told CNN. Obama will explain the rationale for the filing and his hopes that this is the best route for a turnaround.

It is expected that GM will detail some 20,000 job cuts and the closure of about a dozen plants by the end of 2010. The company has already said it will slash 40% of its network of 6,000 retail dealerships by next year and drop four of its brands — Hummer, Saab, Saturn and Pontiac.

The impact of GM’s bankruptcy, which follows a Chapter 11 filing by Chrysler on April 30, will ripple across the nation to dealers, suppliers and other businesses large and small that work in the sector.

The company, once the country’s largest private sector employer, has only a fraction of its former staff. Its 80,000 hourly and salaried U.S. employees are half the number it had as recently as 2001.

Nearly 500,000 U.S. retirees, as well as more than 150,000 of their family members, depend on GM health insurance and pension plans. Retirees will see cuts in their health care coverage, although the company’s underfunded pension plans are not expected to be affected by a bankruptcy filing.

In addition, some 300,000 employees at GM dealerships will be affected, as well as hundreds of thousands of workers at auto parts makers and other GM suppliers whose jobs depend on the company’s survival.

The future

A Chapter 11 bankruptcy filing would aim to help GM emerge with only its more profitable plants, brands, dealerships and contracts. GM’s unprofitable plants, contracts and other liabilities that the company can no longer afford would be left behind.

The government has already given GM $19.4 billion to fund operations and cover losses this year, and total help is expected to exceed $50 billion.

GM will pay back $8 billion of that sum. The government will also receive $2.5 billion in preferred shares of GM that pay a dividend and are more similar to a loan than stock.

But more than $40 billion of federal help to GM will be converted into the 72.5% stake in the new company. Taxpayers would make back the money loaned to GM if shares of the new GM increase dramatically in value following an exit from bankruptcy.

GM is expected to have about $17 billion in debt following bankruptcy, significantly less than the $54.4 billion it owed as of March 31.

(Source: Autoweek)

Bob Lutz, General Motors’ soon-to-retire product czar, said Thursday that not only does he support and endorse the work of President Barack Obama’s automotive task force, but he’d also like to see the government-industry entity become a permanent fixture.

 “Benevolent oversight and two-way communication between Washington and the auto industry” would be a good thing, Lutz told members of the Automotive Press Association at a luncheon Thursday in Detroit.

“Jeez, it only took 30 years for somebody to finally figure it out,” he said.

Lutz cited–and praised–the new federal fuel-economy regulations as an example of what industry and government can do when they work together. Though the new CAFE requirements mandate 35.5 mpg by 2016, Lutz said many parts of the new rules reflect industry positions on the particulars of the law.

The positions voiced by Lutz seem at odds with the suggestion that the GM product vice chairman is leaving GM at year’s end in part because he doesn’t want to deal with life at “Government Motors,” which GM has been called since taking government loans and accepting task-force oversight.

On the contrary, Lutz said, he began to warm to the task-force members when they visited Detroit and seemed more interested in the 560-hp Cadillac CTS coupe than in GM’s more economical offerings.

“That was sort of the moment that I began to take heart,” Lutz said.

(FYI -You can also listen to an audio commentary by folks @ Autoweek on Mr. Lutz words about GM’s future.)

(Source: Automobile Magazine & Autoblog & CNN Money)

(Source: Autoblog)

In the event of a crash, vehicle sensors gather up information and connects an OnStar adviser to a vehicle. OnStar can then contact emergency services and provide information regarding the severity of the crash, with information about airbags deployed and type of impact. 

In the past, OnStar advisers would have to give emergency services a detailed description of the location of the accident.

Subscribers to the telematics system will benefit from new technology that will enable OnStar to electronically transmit precise longitude and longitude coordinates directly to the 911 center. Where available, the Automatic Location Identification (ALI) data display will show the authorities exactly where you’re located, with almost zero opportunity for error.

The presser had the following info: With this newest OnStar enhancement, 911 centers can automatically receive specific vehicle location information (longitude and latitude) in the 911 Automatic Location Identification (ALI) data display which may interface with a sophisticated mapping system used in many jurisdictions to expedite locating emergency victims. 

“In an emergency, accurate location is the most important piece of information to ensure that help arrives promptly at the scene,” said Cathy McCormick, Emergency and Security Service Line manager, OnStar.

In addition to providing location information, OnStar advisors continue to play an important role in providing critical crash and other emergency-related information directly to dispatchers to help them determine the most appropriate response. 

“The Association of Public Safety Communications Officials has worked with telematics providers since their inception to use the latest technology to assist public safety in saving lives,” said Chris Fischer, president, APCO International. “This technology interfaces with the systems many of our centers have in place already to expedite response.”

With OnStar’s Priority Access program, many PSAPs already receive OnStar emergency calls through an existing 911 trunk line. By routing verified emergency calls to 911 trunk lines, dispatchers will not only receive OnStar calls more quickly, they will also receive important call-related data, including OnStar’s PSAP-only callback number. 

(Source: Green Car Congress)

This post is sponsored by LemonFree.com 

Reported sales of hybrids in the US reported by Toyota, Honda, Ford, GM and Nissan dropped 45.5% year-on-year in April to 21,735, despite full month sales for the new Honda Insight and the Ford Fusion and Milan hybrids. Total LDV sales in the US were down 34.4%. 

The reported sales represented a 2.65% hybrid new vehicle market share (based on Autodata’s total LDV sales figure)—the highest monthly new vehicle share for hybrids so far this year, but below the 3.2% high mark in April 2008. Year-to-date in 2009, hybrids are holding a 2.4% new vehicle market share.

Toyota. Overall, Toyota saw a 62.8% drop year-on-year in its combined hybrid sales in April 2009. Year-to-date US sales of Toyota hybrids through April are down 51% to 49,660 units from 101,334 for the same period last year.

In advance of the market introduction of the new 2010 Prius, Toyota Prius sales dropped 61.5% in April to 8,385 units from 21,757. Other results:

• Sales of the Camry Hybrid were down 67.1% to 2,198 units, representing 8.7% of Camry sales. Sales of conventional Camry models were down 31%.
• Sales of the Highlander Hybrid were down 63.8% to 933 units, representing 16.7% of Highlander sales. Sales of conventional Highlander models were down 37%.
• Sales of the RX 400h Hybrid were down 59.7% to 655 units, representing 10.5% of RX sales. Sales of conventional RX models were up 1%.
• Sales of the GS450h were down 59.8% to 33 units, representing 7.1% of GS sales. Sales of conventional GS models were down 71%.
• Sales of the LS 600h L were down 84.4% to 19 units, representing 2.5% of LS sales. Sales of the conventional LS models were down 60%

Honda. With the first full month of sales of the Insight, Honda moved up to the number two slot behind Toyota, with 5,457 units sold. The Insight sold 2,096 units in April, and pushed combined Honda hybrid sales up 25% year-on-year. In April 2008, Honda had the Civic Hybrid on sale as well as the low-selling Accord Hybrid (25 units in April 2008).

Honda sold 3,361 Civic Hybrids in April, down 22.3% year-on-year, and representing 12.8% of all Civics sold. Sales of conventional Civic models were down 23% in April.

Ford. The addition of the new Fusion and Milan hybrids pushed combined Ford hybrid sales to 2,299 units, up 21% compared to April 2008. Ford posted 1,134 units of the Escape and Mariner Hybrids, down 40.5% year-on-year, and representing 7.3% of Escape and Mariner sales. Sales of conventional Escape and Mariner models were down 13% year-on-year.

The new Fusion and Milan hybrid sedans sold a combined 1,165 units, representing 5.7% of all Fusion and Milan sales in April. Sales of conventional models of the Fusion and Milan climbed 3% year-on-year in April.

Click here to read the entire report.

Over 1.8 Million new and used cars

(Source: Wall Street Journal)

General Motors Corp. is expected this week to accelerate talks with the United Auto Workers union and move toward closing about 2,600 dealerships.

 The giant auto maker also is likely this month to approach banks holding secured debt, hoping to work out terms to ease the company’s debt burden.

Reaching agreement on these fronts is critical if GM is to restructure outside of bankruptcy court.

The company has new leverage as it re-engages in talks, thanks to the bankruptcy filing last week by Chrysler LLC. But differences between the two auto makers mean that leverage can take GM only so far.

“The move with Chrysler signals to the GM creditors that bankruptcy is a viable option,” said Lewis Rosenbloom, a bankruptcy lawyer with Dewey & LeBoeuf. Mr. Rosenbloom’s firm does extensive work for GM and Chrysler. “The government is not just going to throw money at this without getting a consensual accord, so I think this is a harbinger of things to come.”

The Treasury Department has given GM until June to work out a restructuring plan and has indicated it may push the company into bankruptcy if the necessary deals don’t materialize.

GM’s hopes of staying out of court hinge on its ability to convince thousands of unsecured bondholders, owed $27 billion, to accept a small equity stake in the company in exchange for forgiving most of the debt. Several bondholders have said the equity exchange will fail if the terms aren’t sweetened.

 (Source: Autoblog & Detroit Free Press)

As in a basketball game when players are yanking on jerseys trying to block each other out under the basket, General Motors and Chrysler’s creditors have officially begun jockeying for position. 

Michigan’s Attorney General, Mike Cox, has sent letters to the CEOs at both companies to ask that, if they file for bankruptcy, they do it in Michigan. Why? Because that would be more convenient to the creditors that GM and Chrysler have in Michigan.

“I am gravely concerned about the impact of any bankruptcy filing in a jurisdiction outside Michigan,” Cox wrote in separate letters to GM CEO Fritz Henderson and Chrysler CEO Bob Nardelli. 

Cox goes on to say that the financial health of both companies and Michigan have been intertwined for decades.

The state is a significant creditor for each of the troubled automakers through the Michigan Business and Single Business Tax obligations, workers’ compensation claims, unemployment insurance and environmental regulations. 

“The costs for many of these creditors (in Michigan) to participate in a New York or Delaware bankruptcy is overwhelming and would undoubtedly lead to unjust bills,” Cox said.

While Cox does not say that either company should file for bankruptcy, neither does he acknowledge that they might not need to if they meet certain criteria set by the U.S. Treasury Department.

“If you ultimately decide to choose bankruptcy as the vehicle to a stronger (company), I respectfully ask that you and your representatives meet with me before any filing is made,” the letter concludes. “Please feel free to contact me at any time, day or night, to discuss this matter.”

GM ready to let Opel go for free?…GM, Earnings/Financials, OpelGeneral Motors wants out of Opel, and according to new reports, it is willing to let the German automaker go without receiving any money for it. The only requirement is that the buyer must inject €500 million (around $652M USD) into Opel for operations. While GM CEO Fritz Henderson has said there are six serious inve…

 GM To Cut 190,000 Units, Shut 13 Plants, Some Permanently [Carpocalypse]

(Source: AutoBlog, New York Times, Jalopnik)

 REPORT: Bill Ford, Jr. “shocked” at Wagoner’s ousting…Some say GM taking government loans (as opposed to private sector loans) changed the rules, and the government needed to protect its investment; others say it was government interference. Regardless, the way things are going, we would be surprised if that were the last “shocking” development in the car industry saga.[Source: The Detroit Free Pre…