After years of looking for a buyer, General Motors is scaling back its medium-duty truck line, and the company will not produce the Chevy Kodiak or the GMC Topkick anymore after next month.

General motors last month announced that it would discontinue franchise agreements with 789 dealerships, and with fewer places to sell its products, it appears GM must scale back its product lines.

Shrinking company, shrinking cars

Last week, GM announced that it would sell the Hummer brand, yet another sign that GM is scaling back on production of large vehicles. GM has already exhausted the number of unsecured loans it can take out, so it has moved on to new ways of saving money.

Consumers are increasingly turning to hybrids and more fuel-efficient cars. Of course, that means sales of large vehicles like the Chevy Kodiak and the GMC Topkick have slowed.

A word from General Motors

GM did issue a statement regarding its decision to stop producing the Chevrolet Kodiak and GMC Topkick. However, the fact that they’d stop making them was pretty much all they gave us. Here’s the statement from GM in its entirety:

GM Statement Regarding Wind Down Of Medium Duty Truck Production

After four years of working with multiple potential buyers, General Motors has decided to wind-down its medium-duty truck operations. Production of the Chevy Kodiak and GMC Topkick medium duty trucks will cease by July 31, 2009.

What happened with Navistar?

Some avid followers of Gm news and truck news might remember that in 2007, GM announced that it would sell its medium-duty truck line, including the Chevy Kodiak and GMC Topkick to Navistar International Corporation.

However, the companies report that the “memo of understanding” between the two “expired and was not renewed,” according to examinter.com. According to Wikipedia, Navistar:

is a manufacturer of International brand commercial trucks, MaxxForce brand diesel engines, IC Corporation brand school buses, Workhorse brand chassis for motor homes and step vans, and is a private label designer and manufacturer of diesel engines for the pickup truck, van and SUV markets.

Kodiak and Topkick history

The Chevy Kodiak and GMC Topkick are produced at Flint Assembly in Flint, Mich. Other trucks, including the GMC Sierra and Chevrolet Silverado are also produced there, and those vehicles will remain in production.

Other GM news

As GM puts an end to production on the Chevrolet Kodiak and the GM Topkick, the company looks toward the future at its new battery lab in Warren, Mich., reports the Detroit Free Press.

The new battery production facility “will expand the automaker’s research and development capabilities for the electric-powered vehicles of the future,” according to the Free Press.

Keeping up with the times

The Detroit Free Press reports:

The new lab, located in the Warren Technical Center, takes up 33,000 square feet and is four times larger than the automaker’s previous battery facility.

The company says more than 1,000 engineers working on advance batteries and electric-driven vehicles will use the lab.

While parts of the lab came online last January, it became fully functional in May, the company said. It is equipped with 160 test channels and 42 thermal chambers that can replicate extreme real-world temperatures.

“We must respond to the demands of society and the demands of consumers with the right level of technology and with technology that can actually get us to the future we all aspire for,” Fritz Henderson, GM president and CEO, said. “This facility is intended to do just that by advancing GM’s knowledge and capabilities and testing skills in new battery technology.”

General Motors will sell Saturn to Penske Automotive Group, according to news reports. The deal is tentative so far, but Roger Penske of Penske Automotive Group has agreed to buy the struggling Saturn brand from bankrupt GM.

GM dealerships across the country are offering historically cheap loans as they are forced to shut down in the wake of the GM bankruptcy. Penske Automotive Group is the United States’ second-largest auto dealership group. Saturn was established as a subsidiary of GM in1985.

Saturn, Penske agreement

According to USA Today:

Penske’s Saturn will continue to receive GM-made vehicles for two years, and is looking for another manufacturer to make vehicles that will bear the Saturn brand, Free Press reporter Tim Higgins writes.

The New York Times reports that the amount Saturn will cost Penske Automotive Group has not been disclosed. The New York Times also says:

The move is the latest by G.M. to sell off assets as it reorganizes itself in bankruptcy. Saturn, which was part of G.M.’s bankruptcy filing on Monday, had drawn 16 bidders over a months long sales process, G.M. said earlier this week.

One more down

The sale of Saturn has been in the works for a while. Wikipedia says:

In US Congressional hearings on December 2, 2008, General Motors announced its intentions to focus on four core brands (Chevrolet, GMC, Buick, Cadillac), with the sale, consolidation, or closure of Saturn and the remaining brands (Pontiac, Hummer, and Saab).

GM has already entered an agreement with Chinese manufacturing company Sichuan Tenzhong regarding sale of the Hummer brand. Saab has been undergoing restructuring for several months and some interested parties have been named as potential buyers. However, GM has not yet reached a deal to sell the Saab brand.

A word from Saturn’s sponsors

The New York Times reports that Penske Automotive Group will acquire the Saturn brand along with the Saturn parts inventory and the right to sell vehicles through the Saturn dealership network.

“We have agreed upon a framework that we believe will build momentum for the Saturn brand,” Mr. Penske said in a statement. “Saturn has a passionate customer base and outstanding dealer network. For nearly 20 years Saturn has focused on treating the customer right. We share that philosophy, and we want to build on those strengths.”

Saturn’s initial cost to GM in the 1980s was about $5 billion.

More on Penske Automotive Group

Penske Automotive Group already represents more than 40 different brands. Wikipedia says:

PAG operates 253 retail automotive franchises, representing 40 different brands, and 40 collision repair centers. PAG is a member of the Fortune 500 and Russell 2000, and has approximately 15,000 employees. PAG has 152 franchises in 19 U.S. states, selling new and previously owned vehicles, finance, insurance products, replacement parts, and offers maintenance and repair services on all brands it represents. Outside the United States it has operations in Puerto Rico, Germany and 110 franchises in the United Kingdom via the Sytner Group.

I haven’t seen any reports on Penske Automotive Group’s current financial situation or changes in its stability because of the economy. In this case, I am assuming that no news is good news.

May was indeed a Merry Month for me here in the Home Office. I hope everyone’s May was as abundant as mine, but from the statistics, it is clear that the recession is still dragging on for so many people. On the last day of every month I take an hour off working and run my business figures across my mental screen to see if I am still ahead of my creditors. The rest of the world is having a rough time and the number of small, medium, large and giant corporations going belly-up is still on the increase. General Motors has gone from the world’s largest corporation to the world’s largest failure.

My personal record for May

Loans

Number of applications to the Personal Money Store for a Personal Loan or a Cash Advance: 0

Sales

Article writing

Gambling articles: 4

Insurance articles: 35

Financial articles: 30

Translations

Assembly instruction page for gadget: 1 – (Hated every minute of it.)

Painting department

Watercolors: 1 started and finished

Acrylics: 1 completed

Income

When it is all paid it will get me through the month of June as long as there are no major surprises. These could range from a car break-down to a washing machine explosion, both designed to wreck any household budget drastically and immediately.

The client who ordered the translation probably won’t pay - I delivered the work in 2 days by email and I have received no response. This is one of the risks of taking work that comes from an unknown source –

• you are offered the work,
• you are excited at the prospect of a new client,
• you do the work in a rush to impress,
• you do a great job to impress even more,
• you send the work,
• you never receive a response,
• emails sent to the same address come back from the Daemon Mailer with a note that says ‘uh-uh, this email address doesn’t exist.’

Expenses

A home-based writer has few expenses. All the usual household expenses apply and unless one prints work, there is no need to buy ink or paper. I splurged and bought a new 22 inch computer screen and I am enjoying it. I figured that if sitting in front of the computer is my life, I may as well make it as comfortable as possible. On the painting side, I made the mistake of using my favorite watercolor brush to work in acrylics and that ruined the brush. So I bought a new one and an extra one in a different size. Buying good brushes is no joke-they’re expensive. I want to write it off on my taxes but I’m not sure if the IRS has me down as an Old Master or a Sunday afternoon painter.

June

Well, Hi June! Let’s take a look at the prospects. On the article writing front I hope everything will remain stable and maybe even increase. Some months I receive orders for extra gambling articles and news items but this sector is having a very bad time. I am psyching myself up into starting a new painting which requires some energy, time and small amounts of money in photos, prints etc. and getting my main model, a grand-daughter, to sit still for a few minutes while I take pictures.

I hope the recession numbers improve so that all will have a good June.

Age

I added 1 month. We all did.

Sichuan Tengzhong Heavy Industrial Machinery Co. Ltd. plans to purchase the Hummer brand from General Motors, the mammoth U.S. auto maker that filed for bankruptcy yesterday.

Hummer is the brand attached to GM’s line of street-legal vehicles based on the HMMWV, or humvee. The abbreviation stands for High Mobility Multipurpose Wheeled Vehicle. Many people still call refer to a GM Hummer as a humvee.

About Sichuan Tengzhong

Sichuan Tenzhong is a Chinese company based in Chengdu. There is still at least one other company interested in buying Hummer, but those talks are on hold. Bloomberg.com reports that GM has a “memorandum of understanding” with Sichuan Tengzhong.

Sichuan Tengzhong “is a privately owned maker of special-use vehicles, structural components for highways and bridges, and construction machinery,” according to Bloomberg.

Few details on the deal

The agreement between GM and Sichuan Tengzhong is confidential, so the selling price for the Hummer brand is unknown. In GM’s bankruptcy court documents, CEO Fritz Henderson estimated Hummer’s worth at $500 million.

GM did say in a statement today that the deal will close by the end of third quarter. So if you want to buy an American-made humvee you’d better get some quick cash now.

The Hummer business

Hummer has been a highly recognized brand under the GM umbrella since it bought the brand name from AM General Motors in 1998. AM General motors originally only manufactured humvees for the military, but it started making civilian humvees under the brand name Hummer in 1992.

Since acquiring the Hummer brand, GM has sold the vehicles under that name and used the Hummer trademark on colognes, flashlights, bicycles, shoes, coats, hats, laptops, clothing, CD players and other items.

More sales to come

GM’s post-bankruptcy sale of Hummer to Sichuan Tengzhong is only the first in a long line of sales that will go through during GM’s massive restructuring. According to Bloomberg:

GM won approval in its first day in bankruptcy court to sell assets as soon as next month after collapsing under $172.8 billion in debt and failing to adapt to consumer demands for models that use less fuel. It also expects to shed Saturn and Saab as part of its restructuring.

Background on Saturn

Saturn Corporation was established as a subsidiary of GM in 1985. Though GM Chairman Rick Wagoner said in December that 2011 was the end of the “planned lifecycle for all Saturn products,” GM announced at the end of April that it is seeking a buyer for Saturn. According to Wikipedia, if GM does not find a buyer:

it is GM’s intention to phase out the Saturn brand at the end of the current product lifecycle. If the brand were to be phased out, it would be the third such action for GM in the 21st century, following those of Oldsmobile, which ceased production in 2004, and Pontiac, which will cease production by the end of the 2010 model year.

Saab story

At the time the Saab reorganization began, three main potential buyers were identified: Koenigsegg, Fiat and Renco Group.

We all remember James Bond, aka 007, aka Sean Connery, the retired hit man and/or spy who now sits on a log on the back page of the paper drooling over his super-expensive Louis Vuitton sports bag. We’re a lot alike, James and I. It’s all a matter of zeros – he was, if you remember, a double zero man. I have a few zeros to my name as well, mainly in my bank account. The other thing we have in common is a liking for Aston Martin Cars. This is relevant because the latest model, Aston Martin, was formally unwrapped at the Geneva Motor Show which took place in March.

I was there

I happened to be in Geneva at that time on the strength of a Personal Loan I had taken from the Personal Money Store to go to Switzerland to examine the plans for a new solar power station that is being planned for installation in Spain. That part of the visit went very well. I did the work, wrote my report, submitted my account, received a check, paid back the Personal Loan and then made the mistake of visiting the Car Show. The moment I laid eyes on that car, everything went into collapse. I have to have one! There will only be 77 made – imagine its value in a couple of years’ time.

The price

Now the price of the One-77 model is being tantalizingly released. There is no final confirmation but it is strongly rumored to be in the $1 million region. The construction will be a rigid carbon fiber chassis, a 7.3-liter V12 engine and more than 560kW of power. The car will weigh about 3,300 lbs and will be capable of a 0-100km/h sprint in around 3.5 seconds. Top speed, and this is the feature that excites both James and I, will be over 200mph. So when I pick up my grandson at the swimming pool just off Highway No 4 and the traffic is moving at a steady 7 mph, I will thoroughly enjoy all the features of my new Aston Martin.

The Mille Miglia

I am writing this within earshot of the death throes of General Motors coming from the TV in the next room. Here’s a strange item: The Mille Miglia is a celebratory road rally designed to evoke the spirit of the famous Italian road race. The participants are a selection of exotic sports cars from the years between 1920 and 1957. The rally takes place on the roads between Brescia and Rome. There were 377 entrants and there was not a single sign of financial problems or recession among any of them. I guess that for some lucky people it’s high-end auto-business as usual. Aston Martin must be feeling pretty confident about producing $1 million cars at a time like this.

I’m calling James

I will call James Bond in the morning and see if he is interested in some sort of joint venture with this new model Aston Martin, something like “You pay, I’ll drive”?

General Motors headquarters in Detroit, Mich.

Yesterday, one of the United States’ largest automakers released the Chrysler dealerships closing list. Today, the largest U.S. auto maker will release the GM dealer closing list.

Chrysler is shutting down 789 dealerships. Check out the Chrysler dealerships closing list. General Motors, sometime today, will release the GM dealer closing list. That list will include names of 1,100 to 1,200 dealerships in the U.S. Unfortunately, for people working at of those dealers, it means they are out of jobs.

Jump on low interest loans

The GM dealers closing and the Chrysler dealerships closing means people in the market for a car may be able to get easy loans and low interest loans as the GM dealers and Chrysler dealerships closing try to liquidate their remaining inventory.

However, that’s where the good news ends. Everyone who works at a franchise on the GM dealer closing list or the Chrysler dealerships closing list will soon be collecting unemployment.

A word from the workers

Franchises on the Chrysler dealerships closing list have already been informed of their fate. That includes the oldest car dealership in Chicago and Island Jeep Lindenhurst in New York.

“My franchise was basically stolen from me, and it’s gonna be given to a dealer down the street for free,” said James Anderer, owner of Island Jeep Lindenhurst, N.Y. “I have 48 people here who are going to be unemployed. We didn’t do anything wrong, but we’re being punished. Chrysler won’t even take the cars back. So the 100 cars I have in inventory I have to retail out of them in the next couple of weeks, either throw them in a Dumpster or sell them for pennies on the dollar. And Chrysler got a bailout. I’m not asking for a bailout. I don’t need a bailout. I run my business properly.”

Holding on to hope

As for the GM dealer closing list, franchise owners don’t know yet whether they are on it. One GM dealer owner, Bob McGuire, says he doesn’t think he will have to close his dealership. But he has considered the possibility.

“I would probably cry and then regroup and sit down with my wife and son and determine what corrective actions we can take to overtake this. I am not going to give up. I have made my life’s work here,” McGuire said.

Warranty holders

KTRK in Houston, Texas, addresses concerns from car owners who hold warranties from franchises that are on the GM dealer closing list or the Chrysler dealerships closing list:

So what if you bought your car from one of the Chrysler or GM dealerships that’s closing? Is your warranty still good?

Yes. But that doesn’t mean your local dealer will be around to service your car. If you live in a metro area, there should be another dealer nearby to fix your car. But if you live in a rural area, getting that tune-up might now require a long drive.

Check back later for the GM dealer closing list.

Begining to Downsize

In today’s uncertain financial times, an occasional payday cash advance may help the typical family hold themselves steady until the economy gets its feet back under it, and the markets, banks, and other businesses have stopped cutting back. Since the beginning of this year alone we have seen several large companies begin the downsizing process in order to keep the body and soul of the business together.

One major layoff that has hit the United States economy has come in the last few weeks with the problems surrounding General Motors. General Motors cut the Pontiac brand out of their product line up, which was the third most purchased brand that they had. It’s not just GM either. Many of the automobile manufacturing companies are rowing through difficult waters these days, and the economic fallout is really leaving us reeling.

The bedrock of our nation’s lending sources is deteriorating rapidly

Some of our country’s largest lending institutions have found themselves in perilous positions over the last eighteen months or so. Washington Mutual, Freddie Mac, Fannie Mae, and AIG are just a few names that we have become accustomed to hearing about in the news, and now even Bank of America is beginning to show stress fractures.

As losses mount among the lending institutions, the healthier entities begin shoring the ground around their own foundations by limiting who they will lend to and in what amounts. The days of 180-day notes are becoming a thing of the past leaving individuals with seemingly no options to float themselves through the economic hard times.

What can the struggling American worker do?

One possible solution that presents itself to the average working individual is a payday cash advance. While this form of instant cash is advertised heavily on the internet, in newspapers, and through various other media forms the general everyday guy may not know exactly what it is.

A cash advance is an unsecured amount of money that is advanced to individuals on a short term basis, usually until their next payday. This advance is generally between $100 and $1500. The institution will likely request a copy of a recent bank statement as well as a couple of recent pay stubs to verify the customer’s ability to stand good for the amount when the advance becomes payable.

Once the customer’s integrity has been verified and the funds have been deposited into the customer’s bank account, the money can then be used for whatever purposes the individual may intend, i.e., groceries, utility or medical bills, etc.

How much reliance can the financially strapped worker put on this option?

Cash advance loans provide a very sensible way to get out of a corner. However, as with many other options that provide the equivalent of instant gratification, the person must never use this as a kind of “bailout.” These are not intended for that purpose and when abused, payday advances can create greater financial difficulties than they were designed to correct.

While automakers look to receive additional funding, consumers are looking to installment loans for aid. In the recession, everyone is suffering. Even huge automakers, despite billions in governmental bailout money, are facing liquidation and bankruptcy. The economy is taking its toll on everyone from industry giants to average taxpayers.

So what are taxpayers doing? Most are looking for money where ever they can find it. That means budgeting carefully, looking to family and friends for loans, installment loans and downsizing. A simple search online for “budgets” brings up a crop of new software aimed at helping Americans budget themselves wisely in the recession. Friends and family are bonding together, trying to share funds so each one is able to cover bills. Installment loan companies are flourishing by creating simple, short-term loans for those who qualify. Many people are downsizing their homes, cars and lifestyles in response to the market.

Automakers looking for help

General Motors is estimated to receive $5 billion in additional federal loans from the government and Chrysler LLC could receive $500 million. Despite the two already receiving $13.4 billion and $4 billion respectively, more money is coming to them, provided they meet the governments’ strict requirement date for restructuring.

The government’s auto task force is giving GM until June 1st to meet their demands and giving Chrysler until April 30th. Both auto giants have already submitted their plans, only to be rejected by the task force. The new deadline represents a finality because if they are unable to restructure adequately Chrysler may have to find a business partner or liquidate and GM may need to restructure under bankruptcy law.

Both companies assessed that they need additional funds to make it through the year. GM CEO Fritz Henderson stated that $4.6 billion will be needed for the company to function in Q2. Despite already receiving $4 billion in government support already, GM is typical of the car industry. They have debt and infrastructure costs that are too high to manage. Without enormous governmental aid, there is no other solution for the company other than bankruptcy protection.

More auto funds

Just as consumers look to installment loans, auto manufacturers are looking to another government auto-bailout. The Treasury department estimates that an additional $1.25 billion will be spent to guarantee warranties for people who buy Chrysler and GM cars during their restructuring. The purpose of this additional money is to give consumers confidence that their warranties are valid and will be fulfilled should they need aid. Part of the plan is to restore the confidence of the American public, so they start buying as they would have in the past. This is to ultimately refuel the economy and get the auto industry back on track.

The recession does not discriminate

In the end, that leaves the American economy struggling to stay afloat. Huge corporations are looking for government aid in continuing to manage. Individuals are looking to cutting-corners, installment loans, and downsizing to help them through the recession. The ubiquitous nature of the recession is evident when seeing how it affects everyone. Billion dollar corporations and mid-income taxpayers are all scrambling to find ways of managing. As the economy levels itself out, people are left to watch the dust settle and wonder where they will be a year from now.

As General Motors faces the possibility of bankruptcy, the company says there may be a nine-week GM shutdown starting as soon as next month.

The automaker might close down several plants for nine weeks. An overabundance of inventory plus typically slow summer sales are causing GM to consider ceasing production for a couple of months.

Not very hush hush

Sources who have talked to newspapers regarding the imminent GM shutdown has asked to remain anonymous because GM workers haven’t been told about the shutdown yet.

Thousands of workers will be laid off if the GM shutdown goes through. however, the employees won’t miss out on much pay. The United Auto Workers union is required to make up most of the difference in salary between GM paychecks and unemployment insurance. So for the nine weeks that production is halted GM workers should be able to get by without payday loans or credit cards.

Summer slowdown

Usually GM shuts down most of its plants for about two weeks during the summer. Plants stop operating in between switching over to building new models. The GM shutdown this year would occur around the same time, it would just be longer.

Outside GM

GM is hoping that an extended shutdown will help reduce the growing stockpile of vehicles it has at the moment. However, auto parts makers could stand to lose a lot of critical revenue if the country’s largest automaker ceases production for nine weeks.

“It’s one of those things we’ve been dreading for a long time,” said Jim Gillette, director of financial services at auto-industry consultant CSM Worldwide in Grand Rapids. “It’s as bad as its ever been.”

Deadlines and debt

GM has taken out $13.4 billion in government loans so far. Furthermore, it owes a $1 billion payment to go toward its $28 billion debt, due by June 1. The company has said it’s not sure it will be able to make that payment.

Self-fulfilling prophecy

Along with the news of the upcoming $1 billion due, rumors began flying about the company possibly filing for bankruptcy. One analyst believes the low sales that causing rumors of the GM shutdown are partially caused by the bankruptcy rumors.

Tom Libby, an independent Detroit-area auto industry analyst, says he thinks the company’s sales are declining because customers are concerned that GM will file for bankruptcy. He also views the possibility of a shutdown as a bad sign.

“They must be forecasting a sales level that is low enough between now and the summer that they see their inventories building,” he said. “It’s sort of an ominous comment on what they see for the industry.”

Avoiding bankruptcy

GM CEO Fritz Henderson recognizes that the company must undergo a financial restructuring, but says he would prefer to do it out of court. Nevertheless, the company has already prearranged a bankruptcy.

The government has said it will guarantee GM and Chrysler warranties during any restructuring.

Number crunchers at GM think bankruptcy may be the only way out.

General Motors is proving to be a good example of what can happen if you take on more debt than you can handle. Unfortunately for the automaker, I don’t think any amount of debt consolidation can dig this company out of the hole.

GM has a $1 billion debt payment coming up; it’s due June 1. Finance Chief Ray Young says GM might not be able to make the payment and is instead relying on a debt-for-equity exchange.

Headed for

GM will need to undergo some serious credit repair if it does default on a $1 billion payment. That $1 billion is only a small fraction of the company’s total debt, which is $28 billion.

GM spokeswoman Renee Rashid-Merem says that the company won’t be able to pay if the debt-for-equity exchange doesn’t go through or if the company goes bankrupt before the June 1 deadline.

Bankruptcy rumors

Young told reporters at a Chinese auto industry summit in Detroit that bankruptcy is “probable” for GM. The U.S. government is backing the company, and Young said that GM will get back on track “in court or out of court.”

Goldman Sachs also said today that both GM and Chrysler will likely file for bankruptcy in coming weeks.

“While there is significant operating upside at GM …, we see a high likelihood that the current class of common shares will be terminated through bankruptcy, [or significantly diluted in a best case],” Goldman analyst Patrick Archambault told clients in a note.

What about the bailout?

The government has been in talks with GM regarding more funding from the White House for the flailing corporation. However, GM’s CEO Fritz Hendersen has said that because of the Obama administrations demands and conditions regarding the funding the company will most likely go bankrupt.

GM already received $13.4 billion from the government, and it is vying for another $5 billion to stay afloat. He said reports that the automaker had been approved for the funding were premature.

“One of the things that was clear … from the task force findings [in February] is that we needed to go deeper and faster with respect to balance sheet restructuring, and so, anything that had been on the table up to that point was off the table,” Henderson said.

Chrysler prepares for merger

Chrysler is also reportedly facing the possibility of bankruptcy. However, the government previously agreed to supply funding aid if the company reached a deal with Fiat by the end of this month. Those negotiations are on track.

If GM and Chrysler go bankrupt, that will leave Ford Motor Co. in the position to capitalize (big time) on the market-share front.

Chevrolet Lumina

General Motors is recalling 1,497,516 cars because of an oil leak that could start an engine fire. The company says the root of the problem is the plastic spark plug retention channel.

GM dealers will replace the defective part with two new spark plug wire retainers for free.

Affected cars

The GM recall affects the following vehicles, all of which have a 3.8-liter engine, are being recalled:

• 1997-2003 Buick Regal
• 1998-2003 Chevrolet Lumina
• 1998-2003 Chevrolet Monte Carlo
• 1998-2003 Chevrolet Impala
• 1998-99 Oldsmobile Intrigue
• 1997-2003 Pontiac Grand Prix

Details on defect

GM explains that some of the vehicles drip oil on the exhaust manifold if the driver slams on the breaks.

That could start a small fire that could spread to a plastic spark plug wire channel and beyond, increasing the risk of an engine compartment fire, The National Highway Traffic Safety Administration says.

Already in hot water

It’s no secret that automakers in general are in trouble. GM has already taken $13.4 billion in short-term loans and bailout money from the government. It seems this little glitch couldn’t come at a worse time for the company. To quote ConsumerAffairs.com:

To put it mildly, automakers don’t like to conduct recalls. They are very expensive and don’t exactly do wonders for marketing efforts.

Changing bailout terms?

To complicate matters more for GM, the government is considering changing the terms of the company’s bailout. Bloomberg.com reports:

The U.S. government is considering swapping some of the $13.4 billion it lent General Motors Corp for an equity stake in a stripped-down version of the carmaker.

Read full article : Obama Auto Team Considers Swapping GM Loan for Equity.

The United State’s biggest automaker and the creator of Segway scooters have teamed up to create the GM PUMA , a two-wheeled electric vehicle. So far the Puma is only in the prototype stage.

Perhaps this “sit-down scooter” or GM Segway, as some people are calling it, could be the next big thing in automotive technology. However, most market watchers are predicting the PUMA (Personal Urban Mobility and Accessibility) will be just was big a flop as the Segway scooter.

About the PUMA

The prototype was unveiled today in Manhattan. The vehicle weighs 300 pounds, runs solely on electricity and basically looks like a sit-down, shielded Segway. It has no safety features, but the makers say such features are unnecessary because the vehicle automatically avoids obstacles, pedestrians and other cars.

The PUMA’s top speed is 35 mph, and its top distance on a single charge is 35 miles.

PUMA price

It’s tough to say whether you’ll need a personal loan to buy a PUMA, if it ever does come out.

“The companies did not release a projected cost for the vehicle, but said ideally its total operating cost — including purchase price, insurance, maintenance and fuel — would total between one-fourth and one-third of that of the average traditional vehicle,” according to the Huffington Post.

So I guess the projected price depends on  your opinion of what an “average traditional vehicle” is.

Predictions of a non-expert

In my unprofessional opinion, any time or money that GM has spent on this vehicle during its time of economic crisis is a huge waste. I applaud the automaker for developing a vehicle that doesn’t use fuel, takes up less space and costs less than its other products, but the GM PUMA will never catch on.

The predictions say the PUMA will cost a fourth to a third the cost of an average vehicle. Well, so do used cars. Only used cars have doors and airbags and places for child seats and luggage and they can go on the highway. They can also get you from point A to point B in the city.

PUMA developers say it has built-in safety features that will keep it from ever crashing. The vehicle stops automatically before running into other vehicles, but that isn’t going to stop a Hummer from flattening it and its driver. Unless all vehicles are replaced with these glorified golf carts, they are scarily unsafe.

In the middle of talk about government loans, the question may be whether short term loans would be a better solution to the crippling effects the current economic downturn is having on the automobile industry.

The President of the United States has requested the resignation of the current CEO of General Motors as part of some management changes that are part of the government’s recovery plan for the auto industry. Whether this is because of suspicion of mismanagement or just a way to cut costs will probably not be known for months, if at all. However, there is no doubt something must be done quickly to save the auto industry from bankruptcy.

Short and long-term effects of a declining auto industry

When you look at the short-term picture in regards to the auto industry, it may not appear very bleak. So what if Chrysler and General Motors shut down—that still leaves Ford and the import market. However, it isn’t as easy as that because the demand for cars will remain the same leaving the remainder of auto manufacturers to pick up all of the slack from the demise of two giants.

The world today relies on motor vehicles and the loss of two of the largest manufacturers would cause a more severe economic downturn than we are now suffering. Without the auto industry, raw goods would not be able to reach their destinations which in turn would push us back a couple centuries. Certainly that seems like a healthier choice but it is not one the country could endure quickly.

What is the right solution to the problem?

As one continues to follow the newspapers and sees the effect such a decline will have on the country and even the world’s global economy, we have to be honest and agree there must be a workable solution to the problem. The answer lies within the larger sphere that is the world and what is the best solution for everyone.

Whether that answer is short term loans or a complete economic government bailout remains in the hands of economists and those better able to analyze the long-term effects that may be felt if we allow even one of the automobile giants to fail.

The world’s entire economic structure depends on making the right decision and providing assurance that the auto industry returns to a stable condition. It is not something that will happen in the next few weeks and maybe not in the next few months, but it’s essential that the solution be forthcoming and a commencement of plans to rebuild the stability of the industry top the agenda.

Economists predict a turnaround the early part of 2010, but the auto industry needs recovery before then or there is not likely to be a turnaround for them. There is not likely to be any other industry that has such an impact because the auto industry is the means for delivery of goods from every other industry. Without it nothing else can survive.

Susan Tompor of the Detroit Free Press writes in a recent editorial that GM will have 30 days to detangle. President Obama calls it a “quick-rinse” bankruptcy. GM stock has tumbled as a result. Investors don’t see more cash advance loans coming from the Obama administration.

Brad Coulter of O’Keefe & Associates said that “the quick rinse sounds good; I just don’t know if it would really work.” The fast-track, pre-packaged reorganization plan the Obama administration appears ready to lay on General Motors is intended to erase debt and contractual obligations, but it has also never been done in this way before.

What would happen?

We don’t know for certain yet. Not until President Obama explains his intentions more fully. Some speculate that the federal government will specify exactly how much money will be made available for what creditors. Take it or leave it.

“We’re in new territory,” Coulter said. “Unless a lot of government funding were involved, I’m not sure how the quick rinse would work.”

No more bailouts?

President Obama has made it clear that the GM and Chrysler will have a limited amount of time to work with creditors, unions, and other stakeholders. They must fix the mess they’ve made by completely restructuring their business, which is no small task to complete in 30 days.

“It will require creditors to recognize that they cannot hold out for the prospect of endless government bailouts,” Obama said.

According to Tompor, General Motors is being offered “adequate working capital” for 60 days. However, share prices have dropped sharply. Ford stock fell as well, but not as much. What this most likely reflects is investors’ lack of confidence that GM and similar failing automakers can fix the problems they created.

Pennies from purgatory

Shadowing the fate of automakers’ stock, the Dow Jones was down nearly 300 points at one point the morning of the announcement, placing trading below 7,500 points. This does not appear to be an aberration, as such a pre-packaged bankruptcy deal would “not be good” the stockholders of General Motors. “Typically, the shareholders would get pennies on the dollar, at best,” Coulter said.

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Unionized workers at Ford voted on changes to their contract, including cutting cost-of-living increases, reducing benefits and eliminating cash bonuses.

The company says the move will help it to stay competitive. According to the UAW, 59 percent of production workers and 58 percent of skilled-trades workers voted “yes,” and the new contract passed.

No government loans

General Motors and Chrysler have both asked the government for quick loans to help their companies stay  afloat. Ford says these changes will prevent the company from having to ask the government for money as well.

“By working together with our UAW partners, we identified solutions that will help Ford reach competitive parity with foreign-owned auto manufacturers and that are important to our efforts to operate through the current economic environment without accessing a bridge loan from the U.S. government,” said UAW President Ron Gettelfinger in a written statement.

More contract details

The ratified deal ended the jobs bank program, and it now allows Ford to make payments in stock to a retirement fund. The fund will extend health benefits to retired workers.

Now the UAW must attempt to reach a deal with both Chrysler and GM.

Making an example

The deal UAW reached with Ford will serve as a guideline for deals with GM and Chrysler. In the agreements reached with the government over more than $17 billion in loans, it specifies that the companies must work out new agreements with the union.

The companies are seeking more funding from the government. In order to get it, Chrysler and GM have to bring their labor costs in down to the same level as foreign auto companies’ plants in the U.S.

Under terms of their loan agreements, progress must be made by March 31. The companies are seeking an additional $21.6 billion in government aid.

General Motors released a report Thursday that said it will likely go bankrupt unless it gets more government funding and successfully restructures the company.

The company has already gotten $13.4 billion in U.S. government loans.

Stock market fluctuations

The dismal report was, of course, followed by a drop in the company’s stock. In fact, GM shares fell to a 75-year low after the news was released.

At their lowest point, shares were going for $1.27 Friday. That’s the lowest price for GM shares since 1933. By afternoon, shares were back up to $1.49.

A little more help

In addition to the $13.4 billion it has already gotten from the U.S. government, GM will seek up to $30 billion to keep the company afloat. But those won’t be easy loans to get.

The company is also seeking additional funding outside the country. It is seeking help from the German government through its Adam Opel AG subsidiary in Germany.

Stocks will continue to decline

Stock market analysts have said that even if the company doesn’t file for bankruptcy, its share prices will likely plummet near worthlessness.

The analysts say that all the bailout money the company is getting from the government will dilute the price of shares.

Meeting with the White House

GM’s stakeholders are holding meetings with members of the Obama administration’s auto task force to weigh options. Treasury Secretary Timothy Geithner and National Economic Council Director Lawrence Summers said the task force will meet at the White House today and discuss GM and Chrysler LLC’s restructuring plans.

GM Chief Financial Officer Ray Young has said that GM is trying to renegotiate its $28 billion in unsecured debt with bondholders.

No, not her...

America and rest of the world needs to invest in alternative fuel sources to replace the rapidly dwindling petroleum resources. Considering how much damage petroleum fuels and products have done to the environment, it’s a no-brainer. Thankfully, Warren McLaren of Treehugger reports that there’s another potential biofuel under the sun that may surprise you. It’s agave, a South American plant that has a lot to do with making tequila.

How would this work? Well, because agave is high in sugar and won’t constrict corn crops like ethanol does, it’s an attractive option. Molasses (a byproduct of sugar cane) is used for ethanol in Australia. The climate down under is considered by many to be an ideal place to start a potential agave biofuel industry, since the plant can grow in a desert. Operational costs in maintaining it would also be low. Cash advance loans would not be necessary.

Kills the worm, puts a tiger in your tank

Don Chambers, an Australian entrepreneur, has calculated that sugar cane averages “9,500L per hectare per annum” for biofuel. Agave would be much more efficient. By his estimates, Chambers thinks “10,000 to 16,000 litres of ethanol per hectare per annum” is possible.

Professor Nanjappa Ashwath of Central Queensland University is also an agave ethanol advocate. He recognizes that “much works still needs to be undertaken to make it viable.” He asked McLaren

What type of agave can we use and what are the cultivation practices? How do we harvest and what kind of plant, who’s going to provide the raw materials to the industry?

Get tanked with tequila

Major auto manufacturers are almost on board, but they have other plans they’d like to try first. Holden, General Motors‘ Australian subsidiary, promises that E85 ethanol cars will become available by 2010. In order to make this happen within that timetable, Holden “appears to be in negotiation with other start-up biofuel companies to supply the 85% ethanol blend,” says McLaren. But if that doesn’t work, agave power may have its day.

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Joe Weisenthal of The Business Insider reports that General Motors is officially America’s “national money pit.” The automaker is bleeding cash at an astonishing rate. One wonders when they’ll file for bankruptcy, particularly after posting a $9 billion loss in the fourth quarter of 2008.

That amount includes special items; if the numbers for normal operating expenses are taken into account ,the loss was “just” $6 billion. According to Weisenthal, that was $1.5 billion worse than analysts and pundits had predicted. Cash on hand is currently at about $14 billion, which according to Phil Lebeau is only $2 billion higher than the “bare minimum” it takes to run the company.

For all of 2008, the company lost about $31 billion.

Breaking it down

Not surprisingly, the management of General Motors wants $16.6 billion more from Washington. If they get it, it would be shocking if President Obama would allow the same leadership body to remain in charge.

But let’s look at this from a slightly different angle for a moment. A $9 billion fourth quarter loss? In order to swallow these numbers, break it down by the day. It so happens that General Motors was losing $85 million per day in the fourth quarter, which is still monstrous. Let’s go deeper:

• General Motors losses…
• Quarter: $9 billion
• Day: $85 million
• Hour: $3.5 million
• Minute: $58,333

Give thanks to The Business Insider for sharing these stupefying calculations. Per minute, General Motors lost more than the average household income for the United States in 2007. It’s certainly more than what my household earned. How about you? Would you put that money to better use?

If automakers in the U.S. want more easy loans from the government, they may face some big changes. As General Motors seeks to separate itself from European brand Saab, some government officials are considering uniting GM with another company: Chrysler.

As one might imagine, the automakers are not crazy about holding hands with their competition.

Why merge?

The most compelling argument for merging the two companies is to retain jobs. Chrysler is struggling even more than GM, and facing a lot more layoffs on top of the ones already made. Officials think that uniting the two companies could possibly save Chrysler, and thus save lots of jobs.

Why not merge?

The government already issued bailout money to both auto companies in December. At that time, the idea of merging the companies was brought up. The reason they didn’t follow through with this idea before was cost. It will cost billions of bucks to close extra factories and dealerships and combine operations.

Kimberly Rodriguez, head of the global auto practice at Grant Thornton Advisory Services, said she thinks the government will at least consider whether it would be better to loan them even more money so they can combine and emerge as a stronger company down the road, according to CNNMoney.com

More money and still more problems

The U.S. Treasury  gave Chrysler and GM a combined $17.4 billion in easy loans last year. And still, the U.S. auto industry is clamoring for more money. The two companies have asked for up to $21.6 billion more. Both companies were required to draw up viability plans, and they submitted those plans, funding requests in place, to the government last week.

Chrysler’s viability plan

In the viability plan Chrysler submitted last week, the company mentioned the possibility of a merger. However, this was only a minor footnote, not a main component of its plan for survival.

Chrysler did quote one analyst, saying combining its company with GM could produce between $40 billion and $58 billion in extra profit by 2016.

GM’s viability

It seems a tad risky to say that GM is in the position to save anyone. Right now, GM is getting rid of partner companies, not gaining them. GM has already cut loose its Swedish auto brand Saab. Rumors are circulating that it is considering unloading its German unit, Opel.

GM also says in its plan that it is not pursuing any kind of combination with Chrysler. It also seemed more dismissive of the idea than Chrysler, according to CNNMoney.com.

GM spokesman Tom Wilkinson still says he wants to hear suggestions from the federal auto task force on what would best for the company.

More layoffs on the horizon

Both companies are making cuts as the economy, the auto industry and sales outlooks continue to grow weaker.

Chrysler says it plans to cut about 3,000 more U.S. workers. GM said it is planning to lay off about 20,000 U.S. workers this year. GM also says it will close five more plants by 2012. It previously named 12 other plants it expects to shut down. David Cole, chairman of the Center for Automotive Research thinks that as the companies get smaller, it will only get easier to merge the two.

If the companies can save more jobs with their easy loans by merging, do you think it’s worth it? Leave your comments.

Soon GM might not be so big anymore.

General Motors has begun dismantling; car prices are being driven so low in Canada that buyers probably won’t need payday loans to cover their down payments.

Cheap Cars in Canada

Auto prices in Canada fell in 2008 for the second year in a row. If a Canadian car salesman tries to convince people they must rush out and get payday loans to take advantage of a good price right now, buyer beware. Competition, the economy and a growing preference for smaller vehicles is driving auto prices down, down, down.

GM backing out of Europe?

GM-owned Swedish auto brand Saab began “reorganization” today, meaning it is going to separate from GM and become its own company. It has been granted protection from all of its creditors during the reorganization time. This move has protected the company from going bankrupt.

Germany being shepherded out?

Business Week says “GM is exploring options” regarding Opel, the U.S. auto giant’s German unit. One of these options includes selling the operation, but so far it’s hard to tell how likely that is.

Auto “giant” downgraded to “tall”

GM sold more vehicles than any other automaker for 77 years straight. This year, for the first time, GM lost the title of World’s Largest Automaker to Toyota. But that was just the beginning.

GM is unloading Saab, exploring Opel options and meanwhile downsizing its operations within the U.S.

“Without Europe, GM almost becomes a second-tier player,” says Joe Phillippi, head of AutoTrends in Short Hills, N.J.

Saab story continued

Now that Saab has been booted from GM, the Swedish courts have three months to turn Saab into a stand-alone car maker. The courts must find investors and creditors and can use money from various government programs. If this cannot be achieved in three months, Saab will liquidate.

Rough road ahead

Saab only sold 93,000 vehicles worldwide last year. Based on these numbers, if Saab employees need extra cash for necessities involved in looking for a job, they might want to start thinking about getting payday loans now.