general-motors

GM-Chrysler Bailout: Was It A Blank Check?

September 21, 2010

WASHINGTON — To hear President Barack Obama’s account of the government’s rescue of General Motors and Chrysler, you might think the Bush administration handed the automakers a big blank check – billions of dollars in loans with no strings attached. Obama, defending his administration’s relations with the business community on Monday, said the White House knew the bailout of GM and Chrysler would be unpopular with the public but was crucial to preserving 1 million jobs. He said his administration forced the auto companies to make drastic changes in return for the money, unlike his predecessor. “Now keep in mind the previous administration had been helping them, giving them billions of dollars, and just asking nothing in return,” Obama said in a CNBC town hall meeting. Not exactly. ___ EDITOR’S NOTE – An occasional look at assertions by public officials and how well they adhere to the facts. ___ President George W. Bush’s administration, only weeks before leaving office, gave GM and Chrysler $17.4 billion in loans after legislation to speed loans to the companies failed in Congress. The Dec. 19, 2008, terms signed by GM and Chrysler required them to reduce their debt levels, negotiate wage and benefit cuts for auto workers and submit detailed restructuring plans by Feb. 17, 2009, showing a path to “long-term viability, international competitiveness and energy efficiency.” By the end of the Bush administration, both companies were running out of money and there was no time for drastic restructuring. In all likelihood, forcing the companies into bankruptcy in December 2008 would have led to liquidation, making the Bush loans a lifeline to keep the companies afloat and buy more time for an overhaul. Some critics have questioned whether the Bush requirements were tough enough. The loan terms instructed the companies to file restructuring reports by March 31, 2009, including “any deviations from the restructuring targets.” That was to include an explanation why failing to meet the specific terms would “not jeopardize the borrower’s long-term viability.” But the companies still faced a looming checkmate: The Bush loans gave the Obama administration the ability to recall the loans if the conditions weren’t met, which would have essentially forced GM and Chrysler into bankruptcy. “We knew that we were the front part of the arrangement and that we would not be there to enforce the terms of the loan,” said Keith Hennessey, a former Bush economic adviser. “Our team wrote the terms of the loan to be tightly binding on the firms and specifically that the loans had to be repaid to the Treasury unless the conditions were met.” The Obama administration pumped billions more into the car makers but gained concessions from company stakeholders and pushed GM and Chrysler through quick bankruptcies last year. Both companies have shown signs of a comeback. GM has posted two straight profitable quarters and is expected to conduct an initial public offering later this year that would help the U.S. reduce its 61 percent stake in the company. Chrysler, placed under control of Italian automaker Fiat, has narrowed its losses and is considering a public stock offering sometime in 2011. Obama and White House officials have made similar claims about the auto bailout before. In a July 30 visit to a GM plant, Obama described three options to address the near GM and Chrysler collapse. “Option number one was to keep on doing what the previous administration had been doing, which is basically give about a billion dollars a month to the auto industry, but not really ask for any kind of change that would get it on the right track,” Obama said. White House chief of staff Rahm Emanuel said in a June interview with ABC News’ “This Week” that “in the case of General Motors, the prior administration wrote a check without asking any conditions of change.” Austan Goolsbee, the new chairman of the White House Council of Economic Advisers, said in a Fox News Sunday interview in June that the White House was confronted with the distressed automakers “because somebody else kicked the can down the road.” In his new book, “Overhaul,” Steven Rattner, who led Obama’s auto task force, credits the Bush team for giving the incoming auto task force “a little breathing room” to restructure the companies and for providing a framework of “expected sacrifices that paved the way for our demands for give-ups from the stakeholders.”

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Video: UAW’s King Says GM Is in `Great Shape’ for IPO: Video

September 20, 2010

Sept. 20 (Bloomberg) — Bob King, president of the United Auto Workers union, talks about the prospects for General Motors Co.’s initial public offering. King, speaking with Suzanne O’Halloran on Bloomberg Television’s “InsideTrack,” also discusses the government bailout of U.S. automakers and outlook for contract negotiations. (Source: Bloomberg)

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Video: Virag Says Chrysler IPO May Not Get Attractive Pricing: Video

September 16, 2010

Sept. 16 (Bloomberg) — Dennis Virag, president of Automotive Consulting Group Inc., talks about Chrysler Group LLC Chief Executive Officer Sergio Marchionne’s remarks today that the automaker may hold an initial public offering in the second half of 2011. Virag, speaking with Betty Liu and Jon Erlichman on Bloomberg Television’s “In the Loop,” also discusses the prospects for an IPO by General Motors Co. (Source: Bloomberg)

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GM Testing Facebook Status Update Voice Command

September 8, 2010

DETROIT — General Motors Co. is testing software that would let drivers talk to their cars to update status messages on the Facebook social media website, as well as listen to Facebook messages, the company said Wednesday. The verbal updates would be made through GM’s OnStar safety network and are part of the automaker’s effort to use the OnStar brand to better compete with rival Ford Motor Co. in auto information and entertainment. GM also is testing a feature that would read cellular telephone text messages to drivers and allow them to respond by picking one of four preset replies with a button on the steering wheel, GM said in a statement. GM won’t say when the features might make their way into its vehicles, but spokeswoman Jocelyn Allen said they must be evaluated thoroughly to make sure they don’t distract drivers from paying attention to the road. The automaker will announce soon that the OnStar brand will be used for high-tech radios, navigation systems and other dashboard electronics that will compete with Ford’s Sync system by Microsoft. OnStar, known mainly for its safety feature that calls for help in case of a crash in which air bags are deployed, is free on most GM vehicles for the first year, then costs $199 per year for a basic service and $299 for service that comes with turn-by-turn navigation and other features.

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Larry Gellman: Let’s Be Honest: About Jobs and the Economy

September 8, 2010

As many of you know, I have been obsessing lately about the way in which truth and facts have seemingly become irrelevant and missing from the public conversation of politicians and our news media. It’s not about whether one agrees or disagrees with the point of view of another. It’s about the way issues are framed in a way that often has nothing to do with the truth and, more often than not, in a way that makes no sense. This will be the first in a series of articles entitled “Let’s Be Honest.” Each article will deal with an important issue which our news media and political leaders are framing in a way that is so dishonest and misguided that it makes rational discussion impossible. For example, reasonable people can disagree about whether Barack Obama is doing a good job as president. But they can’t disagree about whether he is a Muslim (more than 30 percent of Republicans believe he is) or was born outside the U.S (more than 40 percent of Republicans believe he was). Those are simply lies. The same would seem to apply to any reasonable assessment of where our economy and job situation stand right now and whether our president’s policies have helped or hurt. Reasonable people can disagree about the wisdom and long-term impact of Obama’s policies but, as with so much else these days, the news media and politicians have chosen to make rational conversation almost impossible by filling the airwaves and print with so many lies and distortions that useful give-and-take can’t even get started. We are constantly hearing about the horrible condition of the U.S. economy and how Obama’s socialist preoccupation with redistributing wealth and taxing us to death is killing business . But let’s be honest. When Obama became president the economies of the world were in an American-induced death spiral. We were drowning in debt that could not be repaid. Stock markets and commodities prices were in free-fall, our economy was shedding 800,000 net jobs a month, credit was not available to most companies at any price. General Electric and Goldman Sachs had to pay Warren Buffett 10 percent interest and provide an equity kicker just to get a loan which should give you an idea how impossible it was for mere mortals to borrow. There was a very real risk that hundreds of major companies and financial institutions would disappear. Many actually did. We still face enormous economic challenges, but let’s be honest. It is now 18 months later and the stock markets in the U.S. and around the world are 50 to100 percent higher. With federal help, General Motors and many other companies staved off bankruptcy and are now able to sell stock to new investors. Millions of jobs that were thought to be at risk were saved. Commodities prices have recovered broadly and credit is widely available to a broad range of credible borrowers. We have enormous debts to repay once we get the economy on better footing and we face lots of other challenges. But the sequencing of the “experts” is backwards. We already had the economic crisis they are predicting for the future and it had nothing to do with Obama, taxes, or socialism. It was due to good old American greed and free-market capitalism run amok. We are also told that making the richest Americans pay the same level of income tax as they did during the boom times in the ’90s would kill the recovery in its tracks. But let’s be honest. How many millionaires do you know who are putting off purchases and denying themselves stuff that they would run out and buy if they only had an extra few grand? Most people are buying less because they are worth less than they used to be, their homes have gone down in and value, they are earning nothing on their savings, and/or they are heavily in debt. And most others are just nervous about the future–in part because they are told all day in the media and by politicians that they should be outraged and afraid. It has nothing to do with uncertainty about a proposed small increase in taxes for a handful of the wealthiest Americans. The one problem that remains very real for far too many people is jobs. Most companies downsized their work forces during the economic meltdown but now that business has come back–in many cases stronger than ever–they are not hiring new workers. In most cases, they haven’t even hired back the ones they laid off during the crisis. The U.S. unemployment rate is hovering just below 10 percent and the number of people who are holding jobs that pay and require skills far below their qualifications is at least as high. We are told by financial “experts” and politicians that Obama is to blame for reasons that make no sense. They claim that corporate CEOs are not hiring more workers, even though many of their companies are doing great business and are flush with cash, because they are “uncertain” about the impact of health care reform and tax increases they fear may be coming in the near future. These paralyzing uncertainties are simply the icing on the Obama anti-business, anti-America socialist cake which is yet another reason why the Republicans will take over both houses of Congress in a couple months. Or so the story goes. But let’s be honest. Back during the Clinton years when taxes were much higher and when health care costs were going through the roof each and every year, companies were hiring like crazy. Many, like my employer, offered big bonuses to any employee who referred a prospect who ended up being hired by our firm. It had nothing to do with certainty about the future or tax rates or socialism or health care costs. It was all about our CEO’s belief that we were missing out on a lot of business because we didn’t have enough people. So our company hired more people. Today many companies that survived the financial crisis are flush with cash and very profitable. But instead of hiring back the workers they laid off, they are investing in new equipment and productivity technology that will enable them to do more business with even fewer employees in the future. They are also using their huge cash hordes to buy other companies so they can lay off even more workers in the future and become even more profitable–at least in the short run. And when companies make more money, their CEOs (the same ones who decide whether to hire or fire more workers) make lots of money. A recent report issued by the Institute for Policy Studies shows that the 50 companies that laid off the most workers last year saw their profits go up an average of 44 percent. And (surprise surprise) the CEOs of those companies made an average of $12 million last year–almost 50 percent more than average CEO pay at America’s 500 largest companies. So let’s be honest. There’s not a thing that Obama or any other politician can do to lower unemployment in the private sector as long as CEOs and shareholders of our largest companies are getting richer and richer because of mergers, productivity gains, and layoffs. And our free market capitalist system–which I heartily support and have earned my living managing for more than 30 years–guarantees them the right to do that. So, if we’re going to be honest there is a lot to talk about and figure out. It will be tough and it will be complicated. It is so much easier to create villains and phony issues to keep people busy being outraged and afraid. Maybe that’s why so many of our politicians and media celebrities are going that route instead of giving us the facts and trying to help America.

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Daniel Akerson, GM CEO: We Want To Beat BMW, Go Into ‘Attack Mode’

September 8, 2010

DETROIT — General Motors’ new CEO told employees that the automaker needs to make cars and trucks that are better than those of competitors such as BMW. Former telecommunications executive Daniel Akerson, in his first webcast to employees since taking over as CEO Sept. 1, said the company needs to go into “attack mode” to stay ahead of rivals, according to a worker who watched the speech on Wednesday. The speech comes just before GM’s board meets this week. Directors may set a date for the sale of GM stock to the public, perhaps in November. That sale would make GM a publicly traded company again after a radical overhaul in bankruptcy court. Akerson, 61, told employees that GM needs to keep competitors on their heels rather than responding to what they do, said the worker, who asked not to be identified because the webcast was not public. Akerson used BMW as an example, saying that GM’s Cadillac luxury brand has to make cars that are better than BMW’s 300, 500 and 700 series sedans. Through August, BMW has sold 139,236 vehicles, beating Cadillac by almost 47,000 cars and trucks, according to Autodata Corp. In his 40-minute address, Akerson, who has been on GM’s board for about a year, said he is learning quickly about the auto industry but faces a large amount of information. “He said he’s drinking from a fire hose right now,” the worker said. Akerson last week replaced Ed Whitacre, who was also known for an aggressive style. He fired ineffective executives, starred in GM commercials and led the company to two straight quarterly profits after years of losses. Akerson, GM’s fourth CEO in less than two years, was introduced by Whitacre, who told employees that he stepped down because the company needed a CEO who would be in charge long after the stock sale. Whitacre, 68, a retired CEO of telecommunications giant AT&T Inc., said he didn’t want to stay too long after the sale, which is called an initial public offering. Like Whitacre, Akerson has worked as a top executive at major telecommunications companies, holding leadership posts at both MCI and Nextel. A graduate of the U.S. Naval Academy, Akerson was appointed to GM’s board by the government in July of last year after GM emerged from bankruptcy protection. He also led global buyouts for The Carlyle Group, a private equity firm. Whitacre will stay on as GM chairman through the end of the year, and no replacement has been named for that position. GM is 61 percent owned by the federal government, but the company hopes to shed that majority control with the IPO.

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Video: TrueCar.com’s Painter Says U.S. Auto Market Has Bottomed: Video

September 1, 2010

Sept. 2 (Bloomberg) — Scott Painter, chief executive officer of TrueCar.com, an automotive-sales data-marketing company, talks about the outlook for the U.S. auto industry. Toyota Motor Corp., General Motors Co. and Ford Motor Co., the three largest sellers of autos in the U.S., reported bigger sales declines than analysts projected as the industry posted its worst August in 28 years. Painter speaks with Rishaad Salamat on Bloomberg Television. (Source: Bloomberg)

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Toyota Recalls 1.1 Million Corollas, Matrixes

August 26, 2010

NEW YORK — Toyota recalled 1.33 million Corolla sedans and Matrix hatchbacks in the U.S. and Canada Thursday because their engines may stall, the latest in a string of quality problems at the Japanese automaker. The recall covers vehicles from the 2005-2008 model years sold in the U.S. and Canada. Three accidents and one minor injury have been reported, though Toyota said a link to the engine issue has not been confirmed. Toyota’s latest recall is one of its largest since it began recalling cars and trucks last October. The automaker has now recalled more than 10 million vehicles worldwide for problems that run from faulty gas pedals and floor mats that can trap accelerators, to problems with its Prius hybrid. Toyota said Corollas and Matrixes equipped with 1ZZ-FE engines may contain a defective engine control module, the computer that regulates the performance of the engine. In some cases, a crack may develop on the module’s circuit board, which could prevent the engine from starting or could cause harsh shifting or an engine stall. Separately, General Motors Co. is recalling 200,000 Pontiac Vibes in North America due to the same problem, GM spokesman Alan Adler said. The Vibe is similar to the Matrix and was built under a joint venture between Toyota and GM at a now-closed factory in Fremont, Calif. Both automakers said they will replace the engine control modules on the recalled vehicles at no charge. The companies will begin mailing notifications to owners of the affected vehicles in mid-September. The engine control module with the possible defect was manufactured by Delphi Corp., a large auto parts supplier headquartered in Troy, Mich., according to documents filed with federal regulators. The automaker has been more aggressive in its pace of recalls in recent months. Its last recall was in late July, when the automaker said it would fix half a million cars, mostly Toyota Avalon sedans, over a steering issue. U.S. regulators hit Toyota with a $16.4 million fine earlier this year for failing to promptly tell the government about its car defects. Toyota has been working to overhaul its quality controls and respond more aggressively to customer complaints in the fallout of its recall crisis. The National Highway Traffic Safety Administration has been investigating the possibility of engine stalling in the Corolla and Matrix models since late November. On Tuesday, the traffic safety agency said it had intensified its investigation. NHTSA spokeswoman Olivia Alair said Thursday that the probe is ongoing. Toyota spokesman John Hanson said the automaker is cooperating with the safety agency on the probe. He said it was the automaker’s decision to issue the recall, adding it was not pressured by NHTSA to do so. U.S.-traded shares in Toyota Motor Corp. fell 34 cents to $68.72. ___ AP Autos Writer Stephen Manning contributed to this report from Washington.

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Toyota Prius Gets ‘Electronic Humming Device’ To Protect Pedestrians

August 24, 2010

TOKYO — Toyota’s Prius hybrid is becoming a little less quiet with a new electronic humming device that is the automaker’s answer to complaints that pedestrians can’t hear the top-selling car approaching. The 12,600 yen ($148) speaker system that goes under the hood of the third-generation Prius sets off a whirring sound designed to be about the same noise level as a regular car engine so that it isn’t annoying, Toyota Motor Corp. said Tuesday. It goes on sale Aug. 30 in Japan, and owners pay extra for installation charges. Its use is voluntary. Overseas sales plans are still undecided, but Toyota is studying regulations and considering offering it in the U.S. and other markets, said spokeswoman Monika Saito. The gasoline-electric hybrid gets good mileage but is also quiet because it runs as an electric car much of the time. That advantage has drawn complaints that pedestrians, the blind in particular, are at greater risk of being hit by the car, especially at low speeds. The U.S. government’s auto safety agency found in a research report last year that hybrids are twice as likely to be involved in pedestrian crashes at low speeds compared with cars with conventional engines. Toyota, which also makes the Camry sedan and Lexus luxury models, said it plans versions of the device for other hybrid models, plug-ins, electric vehicles and fuel-cell vehicles. Pedestrian deaths compared to overall traffic fatalities are higher in Japan than in the U.S. and many other nations because of Japan’s narrow and crisscrossing crowded streets. Japan is also a rapidly aging society, making audible cars critical. Toyota said the device is based on guidelines addressing the dangers of silent cars, including hybrids, issued in January by the Japanese government. Other automakers, including General Motors Co., Ford Motor Co. and Nissan Motor Co., are also working on countermeasures to make quiet ecological cars safer. The Prius device’s humming is so soft it is barely audible in a noisy street but can be a lifesaver in quieter environments. It can be turned off with a switch but goes on automatically every time the car starts. The Prius has been the top-selling car in Japan for the past 15 months straight, benefiting from incentives designed to boost sales of green cars. Toyota, the world’s biggest automaker, has sold nearly 337,000 third-generation Prius cars in Japan. It has sold more than 2.68 million hybrids around the world so far, a million of them in Japan. ___ On the Net: Video demonstration of the device: http://www2.toyota.co.jp/en/news/10/08/0824.html

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Video: BNP Paribas’s Yeung Discusses BYD Results, GM IPO: Video

August 19, 2010

Aug. 20 (Bloomberg) — Jack Yeung, an analyst at BNP Paribas Securities Asia Ltd., talks about the outlook for BYD Co.’s financial results, and General Motors Co.’s filing for an initial public offering. GM’s filing with the U.S. Securities and Exchange Commission yesterday laid out the challenges the Detroit-based company will face generating enough investor demand to complete an offering that people familiar with the plan have said may be as large as $16 billion. Yeung, who speaks with Bloomberg’s Rishaad Salamat in Hong Kong, also discusses China’s auto industry. (Source: Bloomberg)

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Video: Cole Discusses Prospects for GM, U.S. Auto Industry: Video

August 19, 2010

Aug. 19 (Bloomberg) — David Cole, chairman of the Center for Automotive Research, talks with Bloomberg’s Julie Hyman about General Motors Co.’s filing for an initial share offering and the prospects for the U.S. auto industry. (This is an excerpt of the full interview. Source: Bloomberg)

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Video: Greenwald Discusses GM IPO Filing, Whitacre’s Departure: Video

August 19, 2010

Aug. 19 (Bloomberg) — Gerald Greenwald, managing partner of Greenbriar Equity Group LLC and a former chairman of Chrysler Motors, discusses General Motors Co.’s planned initial share offering and the decision of Chief Executive Officer Ed Whitacre to step down. Greenwald speaks on Bloomberg Television’s “In the Loop With Betty Liu.” (This report is an excerpt. Source: Bloomberg)

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GM IPO: Will You Buy Shares In The New General Motors? (POLL)

August 19, 2010

DETROIT (AP) – Thirteen months ago, General Motors was fighting for its life in bankruptcy court. Now, the automaker is laying the groundwork to sell stock to the public once again with the eventual goal of ridding itself of government ownership. General Motors Co. filed the first batch of paperwork required to hold an initial public offering of stock late Wednesday. The 700-page document submitted to regulators laid out reasons, and risks, to investors considering buying GM stock. The filing, called an S-1, was short on specifics. GM didn’t say how many shares would be sold or when, although experts say the IPO could come as early as October. It also didn’t say how many shares GM’s majority owner, the U.S. government, plans to unload. Such a sale would eventually lead to the government shrinking its big stake in the automaker, something GM is eager to see. The company’s outgoing CEO, Ed Whitacre, has said government ownership has hurt GM’s public image and sales. However, GM warned in its filing that the U.S. Treasury would continue to own a “substantial interest” in the automaker following the IPO. More details about the offering is likely to emerge with additional filings in the coming weeks and months. GM did say its stakeholders initially will sell common stock, while the company itself will sell preferred shares, which are like bonds and include dividend payments. GM said it will use proceeds from the preferred stock sale for general business expenses. The filing means GM and its current owners are likely to sell part of their stakes in several offerings that will take months to finish, said Scott Sweet, owner of IPO research firm IPO Boutique. Analysts have speculated that the initial sale could be worth up to $20 billion, but the filing gave no number. GM would have to bring in $70 billion just to pay back all the automaker’s stakeholders. That could come in several sales over months. The U.S. government now owns about 61 percent of GM, which it got in exchange for giving the company $50 billion in survival aid last year. GM has repaid $6.7 billion, and the remaining $43.3 billion was converted to the ownership stake. Other stakeholders include a United Auto Workers health-care trust and the Canadian government. Demand for GM’s new shares isn’t known. In the coming weeks, the company will pitch itself to big investors such as pension, mutual and hedge funds. Many of the shares will go to those larger players, but small investors will also get a chance to buy in. There are risks. The IPO market is weak. And GM, which lost about $100 billion in the five years leading up to last year’s bankruptcy, is hardly a sure bet. Still, a quick run through bankruptcy court cleansed GM of burdensome debt. It closed 12 factories and its labor costs were cut dramatically through deals with the United Auto Workers union. Helped by those cost cuts, GM earned a healthy $2.2 billion in the first half of this year despite depressed U.S. auto sales. It’s set up to do better if sales rebound, especially in fast-growing countries like Brazil and China, where GM plans to launch nearly 20 vehicles in the next two years. The company gave investors a lengthy list of risks on Wednesday, including restructuring costs and concerns about the competitiveness of its vehicles. For example, the Chevrolet Volt, its highly anticipated electric car due for release this year, requires battery technology “that has not yet proven to be commercially viable. There can be no assurances that these advances will occur in a timely or feasible way.” Even new executives were listed as risk factors. GM acknowledged that incoming CEO Daniel Akerson and Chief Financial Officer Chris Liddell have “no outside automotive industry experience” and said it was important for the management team to “quickly adapt and excel” in their new roles. Both, however, have extensive experience with successful companies. Akerson held top posts for telecommunications firms and Liddell served as CFO of Microsoft Corp. GM said the company was dependent upon global car and truck sales and said “there is no assurance that the global automobile market will recover in the near future or that it will not suffer a significant further downturn.” The company said it had no plans to pay dividends on its common stock and future dividends would be determined by its board of directors. The company said it will trade on the New York Stock Exchange under the ticker “GM,” the symbol under which it traded before it entered bankruptcy. Shares will also trade in Canada on the Toronto Stock Exchange, but the ticker symbol hasn’t been determined. Francis Gaskins, president of IPOdesktop.com, said GM’s decision to sell preferred shares rather than common stock is a sign that it is having trouble attracting interest from investors and felt the need to sweeten the offering with the preferred dividends. “Only a company that’s not strong would do that,” he said. “It’s a tip-off that the investment community needs something special.” The new preferred shares will be converted to an unknown number of common stock sometime in 2013, the filing said. GM also said in the filing that said outgoing CEO Ed Whitacre, who leaves Sept. 1, will get a compensation package worth around $9 million. He gets a $1.7 million annual salary and the rest in stock. ___ AP Auto Writer Dan Strumpf contributed to this story from New York.

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Video: Meyers Calls GM Public Offering `Politically Motivated’: Video

August 19, 2010

Aug. 19 (Bloomberg) — Gerald Meyers, professor at the University of Michigan and former chief executive officer of American Motors Corp., talks about General Motors Co.’s initial share offering. Meyers speaking with Erik Schatzker on Bloomberg Television’s “InsideTrack,” also discusses the automaker’s management structure and consumer sentiment. (Source: Bloomberg)

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Video: Tyndall Says GM $16 Billion Offering ‘Feels Expensive’

August 19, 2010

Aug. 19 (Bloomberg) — Mike Tyndall, a European automotive specialist at Nomura International Plc, talks about General Motors Co. filing for an initial public offering one year after the company received a $50 billion taxpayer bailout following its bankruptcy in June 2009. He speaks with Andrea Catherwood on Bloomberg Television’s “The Pulse.”

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Video: George Sees IPO Enabling GM to `Heavily’ Commit to China: Video

August 18, 2010

Aug. 19 (Bloomberg) — Jacob George, China managing director at J.D. Power & Associates, talks about General Motors Corp.’s initial public offering and business strategy in China. GM filed for an initial share offering that will mark the return of what was once the world’s largest automaker to public markets a year after it was bailed out by the government. George speaks with Bloomberg’s Rishaad Salamat from Shanghai. (Source: Bloomberg)

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Video: Lindland Says Lack of Credit Hurting U.S. Car Sales: Video

August 18, 2010

Aug. 19 (Bloomberg) — Rebecca Lindland, an analyst at IHS Automotive in Lexington, Massachusetts, talks about the outlook for the U.S. car industry and General Motors Co. GM, 61 percent owned by the U.S. Treasury, filed for an initial share offering that will mark the return of what was once the world’s largest automaker to public markets a year after it was bailed out by the government. Lindland speaks with Bloomberg’s Phillip Yin. (Source: Bloomberg)

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Video: Shah Sees Rival Offers for Potash on Monopoly Concerns: Video

August 18, 2010

Aug. 18 (Bloomberg) — Sachin Shah, a special situations and merger arbitrage strategist at Capstone Global Markets LLC, talks about BHP Billiton Ltd.’s hostile $40 billion bid for Potash Corp. of Saskatchewan Inc. Shah also discusses General Motors Co.’s initial share sale and its possible impact on GM’s agreement to buy subprime lender AmeriCredit Corp. He speaks with Bloomberg’s Matt Miller and Carol Massar on Bloomberg Television’s “Street Smart.” (Source: Bloomberg)

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Video: Shah Sees Rival Offers for Potash on Monopoly Concerns: Video

August 18, 2010

Aug. 18 (Bloomberg) — Sachin Shah, a special situations and merger arbitrage strategist at Capstone Global Markets LLC, talks about BHP Billiton Ltd.’s hostile $40 billion bid for Potash Corp. of Saskatchewan Inc. Shah also discusses General Motors Co.’s initial share sale and its possible impact on GM’s agreement to buy subprime lender AmeriCredit Corp. He speaks with Bloomberg’s Matt Miller and Carol Massar on Bloomberg Television’s “Street Smart.” (Source: Bloomberg)

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Video: Anwyl Says 2011 May Have Been Better Time for GM IPO: Video

August 18, 2010

Aug. 18 (Bloomberg) — Jeremy Anwyl, chief executive officer of Edmunds.com, talks about today’s filing for an initial share offering by General Motors Co. GM’s IPO would mark the return of what was once the world’s largest automaker to public markets a year after it was bailed out by the government. Anwyl talks with Carol Massar and Matt Miller on Bloomberg Television’s “Street Smart.” (Source: Bloomberg)

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Video: Gaskins Says No `Rational Reason’ to Own GM Over Ford: Video

August 18, 2010

Aug. 18 (Bloomberg) — Francis Gaskins, president of IPOdesktop.com, talks about his opposition to the General Motors Co. move to file for an initial share offering, which would mark the return of what was once the largest automaker to public markets after it was bailed out by the government. Gaskins talks with Pimm Fox on Bloomberg Television’s “Taking Stock”. (Source: Bloomberg)

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Steve Parker: Driving Mitsubishi’s i-MiEV electric; Fun in an EV?

August 16, 2010

“It’s not easy bein’ green…” Thus sangeth (singeth?) Kermit the Frog several decades back, and as it turns out, he was not kidding. Especially when it comes to cars. Car companies worldwide should have paid heed to those simple words many years ago. Both Nissan and General Motors will be selling, in the US, green cars towards the end of this year. But Mitsubishi is also bringing out their own version of a green car. i-MiEV (Mitsubishi innovative electric vehicle, pronounced “eye-meev”) has been for sale for about two years in Japan, and some 20,000 units have left showroom floors at a cost of around $23,000 US dollars. People who stopped me as I was getting into or out of the car during the week I had it had a natural inquisitiveness, but very few noticed the car was a Japan-only model, with the steering and gauges and controls (and driver!) on the right hand side. My i-MiEV could be charged by 110 or 220 household current or by using a quick charging station, not yet available in the US market (though it sounds similar to the quick charging station that Leaf buyers will usually have installed in their garages). i-MiEV weighs-in at 2,376 pounds, and charging times vary from 12 hours for 110 volts to 6 hours using the 220 volt plug-in option and using the quick charge system that will charge i-MiEV to 80% capacity in just 25 minutes. The Lithium ion (Lion) battery pack powers a 64 horsepower/113 pound feet of torque Permanent Magnet Synchronous Motor and it’s all expected to have a range of 80 to 100 miles as fast as 80 mph. Not much at all, really, especially for a family’s primary car. Both Japanese EVs are “pure electric” with relatively low and slow outputs. Both i-MiEV and Leaf will be marketed as a second or third (or fourth, etc) car and it’s price (around $25,000 US) won’t sting the wallet too much. Only Volt is aimed at being a family’s primary car with it’s (claimed) 600-mile range and more spacious interior than the Japanese competition. Leaf claims a 100-mile range and i-MiEV… Well, poor little i-MiEV needs a lot of changes before it will sell here. Like Nissan’s Leaf, i-MiEV is a “pure EV,” which uses no gasoline or fuel other than electricity to go a wandering. Incidentally, in spite of Mitsu’s suggested pronunciation, there seems to be a dozen — or more — ways to pronounce i-MiEV, so just take your best shot at it. GM’s Volt sets apart from other “pure green” vehicles because it has a small gasoline engine on board. That engine keeps the lithium ion battery pack charged. All a driver need worry about is the amount of fuel — gasoline — remains in the gas tank. This goes a long way to relieving “range anxiety,” the fear of not knowing how many miles are left in the car’s electric motor. It’s the electricity remaining in the battery pack which tells an owner how many miles they have left. GM says there’s no real connection between the gasoline engine and the drivetrain itself. Starting in 1996, people were able to lease (no buying option on the car; leasing an EV1 kept the car under GM’s control), through Saturn dealers, GM’s EV1, an all-electric car. They were eventually taken back by GM and almost all were crushed or shredded; a few made it into museums and car collections kept by top GM executives. i-MiEV will not be on-sale in the US until at least winter of 2011, but enthusiasts might think it’s worth waiting for. That’s because i-MiEV has rear-wheel drive and handles, quite literally, like a go-kart. Of course silence is the golden rule here, except for that ubiquitous and irritating beeping when “Reverse” is the automatic gear chosen. As is the case with most gas/electric hybrids and especially pure EVs, i-MiEV can be just about any other car “off the line at the stop light Grand Prix,” run thousands of times throughout the US every day. That’s because electric motors display their torque almost instantly, and torque is also what we call “launch.” So figure for the first 25 yards, you’ll beat almost anything in i-MiEV. After that, we take no responsibility. Because Nissan and GM have literally beaten Mitsubishi to the punch with their Leaf and Volt, Mitsubishi thought it a good idea to put as many press evaluation vehicles on the road as possible. The cars we auto journos drove were garishly painted, so much so that I asked a Mitsubishi PR person how much they were paying me for advertising their car in trendy West Los Angeles. I didn’t get an answer to that one… This Mitsubishi is a true four-door, four-passenger auto with room in the back for two real human beings. Bucket seats up front make for comfortable seating for driver and left seat passenger. The large battery pack is in the trunk, where’d you expect to find the spare tire. The radio in the center console is a last-minute toss-in, Mitsubishi folks telling me that by the time the car goes on-sale here, it will have a large video screen with all the expected bells and whistles. With what appears to be the lowest going-in price of the two EVs and one extended range hybrid the first three cars making their electric intentions known, i-MiEV seems to have the corner on price. At this point, engineers need to figure out how to give the car more mileage range; 40 mpc (miles per charge) is already unacceptable when Nissan’s EV claims 100 mpc and GM saying their Volt will hit 600 miles per thankful of gas thanks to its on-board gasoline-fired battery charger. The most miles I achieved on a fully-charged i-MiEV was about 70 miles in a combo of in-town and highway driving. There is an “electric gauge” that goes down like a $10 crack whore when you step on the gas the second you hit the freeway, and it’d be nice if all three of these cars could make some improvement in that department. Photos by Steve Parker Tune and call-in LIVE to Steve Parker every Saturday and Sunday on www.TalkRadioOne.com ; details on that website. Follow him on Twitter at: www.Twitter.com/autojourno

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Video: Bloomberg’s McCracken Discusses Goldman’s Role in GM IPO: Video

August 16, 2010

Aug. 16 (Bloomberg) — Bloomberg’s Jeffrey McCracken talks about Goldman Sachs Group Inc.’s role in General Motors Co.’s initial public offering. In a pitch to the U.S. Treasury in May, Goldman Sachs offered to accept a fee of 0.75 percent, according to people with direct knowledge of the matter. That’s a fraction of the 3 percent banks typically charge on the largest IPOs. McCracken speaks with Erik Schatzker on Bloomberg Television’s InsideTrack.” (Source: Bloomberg)

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Video: Harper Discusses Goldman Stock Options, Role in GM IPO: Video

August 16, 2010

Aug. 16 (Bloomberg) — Bloomberg’s Christine Harper discusses stock options exercised by Goldman Sachs Inc. executives. Chairman and Chief Executive Officer Lloyd Blankfein made $6.1 million by exercising options granted to him in 2000 that were due to expire in November. Harper, speaking with Erik Schatzker on Bloomberg Television’s “InsideTrack,” also discusses Goldman’s role in General Motors Co.’s initial public offering. (Source: Bloomberg)

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Auto Industry Goes From Gloom To Economic Bright Spot

August 14, 2010

After a dismal period of huge losses and deep cuts that culminated in the Obama administration’s bailout of General Motors and Chrysler, the gloom over the American auto industry is starting to lift.

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Auto Industry Goes From Gloom To Economic Bright Spot

August 14, 2010

After a dismal period of huge losses and deep cuts that culminated in the Obama administration’s bailout of General Motors and Chrysler, the gloom over the American auto industry is starting to lift.

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GM To File IPO Papers Next Week: AP Source

August 13, 2010

DETROIT — General Motors Co. is likely to file paperwork next week that describes its plan to sell shares to the public, a person familiar with the matter said Friday. The Detroit automaker had planned to file the papers on Friday but delayed the move to build distance between the filing and two major announcements it made on Thursday, said the person, who asked not to be identified because the company is not commenting publicly on the stock sale. GM said Thursday that CEO Edward Whitacre would step down as CEO Sept. 1 and be replaced by board member Daniel Akerson. It also reported a $1.3 billion second-quarter profit, its second-straight positive quarter. The board has not yet decided the date of the stock sale, the person said. However, experts say an initial public offering, or IPO, generally takes place three months after early paperwork is filed. GM got $50 billion in aid from taxpayers last year in exchange for 61 percent of the company. It repaid $6.7 billion that was considered a loan, and a stock sale would repay at least some of the remaining $43.3 billion. The person said GM’s board is weighing two desires: To shed government ownership quickly or wait longer and perhaps sell shares for a higher price if the automaker continues to do well. Whitacre has said that government ownership is hurting the company’s public image and sales. The Obama administration may be pressuring GM to sell shares soon to influence the November congressional elections and make the government’s controversial investment look smart, some analysts say. But Whitacre and the government have said GM is in charge of the IPO timing. ___ Associated Press Writer Ken Thomas in Washington contributed to this report.

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Video: Lindland Says Timing of GM’s CEO Change a `Curiosity’: Video

August 13, 2010

Aug. 13 (Bloomberg) — Rebecca Lindland, an analyst at IHS Automotive, talks about the leadership change at General Motors Co. and prospects for an initial public offering by the company. GM Chief Executive Officer Ed Whitacre, who led the largest U.S. automaker from bankruptcy to two straight profitable quarters, will step down as CEO on Sept. 1 and be replaced by director Dan Akerson. Lindland speaks with Margaret Brennan on Bloomberg Television’s “InBusiness.” (Source: Bloomberg)

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Video: McCaw Says Akerson Will Have `Tough’ Challenge at GM: Video

August 13, 2010

Aug. 13 (Bloomberg) — Craig McCaw, chairman of Eagle River Holdings LLC, says newly named General Motors Co. Chief Executive Officer Dan Akerson will have a “tough” challenge leading the automaker. McCaw hired Akerson in 1996 to help turn around Nextel Communications Inc. Dan Bloomberg’s Jon Erlichman reports. (Source: Bloomberg)

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Video: Virag Says GM CEO Pick Akerson Is a `Question Mark’: Video

August 12, 2010

Aug. 12 (Bloomberg) — Dennis Virag, president of Automotive Consulting Group Inc., talks about how General Motors Co. Chief Executive Officer Ed Whitacre, who led the largest U.S. automaker from bankruptcy to two straight profitable quarters, will step down as CEO on Sept. 1 and be replaced by director Dan Akerson. Virag talks with Pimm Fox on Bloomberg Television’s “Taking Stock”. (Source: Bloomberg)

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Video: Caldwell Doubts General Motors CEO Change Will Delay IPO: Video

August 12, 2010

Aug. 12 (Bloomberg) — Jessica Caldwell, senior analyst at Edmunds.com, talks about General Motors Co. Chief Executive Officer Ed Whitacre’s decision to relinquish his CEO post and the outlook for an initial public offering by the company. Whitacre will step down on Sept. 1 and be replaced by Dan Akerson, a member of GM’s board of directors. Caldwell also discusses the U.S. government’s ownership of GM. She talks with Carol Massar and Matt Miller on Bloomberg Television’s “Street Smart.” Bloomberg’s Jeff Green also speaks. (Source: Bloomberg)

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Economic Recovery Waits For Increasingly Thrifty Consumers

August 3, 2010

WASHINGTON — American shoppers are being careful about how much they spend, and that’s making businesses cautious about hiring. For the economic recovery to gain strength — and the unemployment rate to come down in any meaningful way — consumers will need to become less frugal. But a flurry of data released Tuesday suggests families are reluctant to increase their spending, even as they buy more stuff, including cars and consumer staples like razors and shampoo. “Once the unemployment rate starts coming down in a significant way, consumers will feel more confident and start spending. But businesses are reluctant to step up hiring until they see stronger demand,” said Chris G. Christopher, senior economist at IHS Global Insight. “It’s a Catch-22 situation.” Unemployment stands at 9.5 percent. The government’s next jobs report comes out Friday. General Motors and Chrysler on Tuesday posted higher U.S. sales for July, a sign that Americans are still willing to buy big-ticket items. And Procter & Gamble, maker of Tide laundry soap and Pampers diapers, said its revenue grew 5 percent in the latest quarter. But other industry and government data were more downbeat. Factory orders dropped in June for the second consecutive month after nine straight months of gains, the Commerce Department said. And the number of buyers who signed contracts to purchase homes fell in June to the lowest level on records dating back to 2001, according to the National Association of Realtors. One telling detail about consumers’ habits these days came from the Commerce Dept.’s personal income and spending report for June: the annualized savings rate stood at 6.4 percent, the highest level in nearly a year – and triple the rate in 2007, before the recession. The savings rate hasn’t dipped below 5 percent since October 2008. Even the way people are paying for things shows a change in attitude about money. Consumers shied away from accumulating new debt during the second quarter, according to the latest reports from MasterCard Inc., and Visa Inc. Overall card use rose 14 percent. But the growth came almost entirely from debit cards, which rose to $465 billion, from $408 billion a year ago. Credit card use edged up less than a percent to $345 billion from $342 billion last year. Analysts believe consumers have now rebuilt savings and will be open to spending more in the coming months. “We think most of the required increases in savings have already happened and that further increases in incomes will translate into consumer spending,” said Peter Newland, an economist at Barclays Capital. Consumer spending is important because it accounts for 70 percent of total economic activity. Last week, the government said economic growth for the second quarter slowed to 2.4 percent. Many analysts believe it will dip further in the second half of the year because of high unemployment, shaky consumer confidence and weakness in home prices in many major metropolitan areas. While personal income growth was flat in June, it rose in April and May. But households chose to save the extra money rather than spend it. Longer term, that may not be such a bad thing, economists said, because the savings help households get control of their bills and make purchases they can afford. “It is of some comfort that households now appear to have something of a cushion that can be used to pay down debt or support spending,” said Paul Dales, U.S. economist at Capital Economics. Make no mistake, Americans are spending money. But they want value for their purchases or a good deal. If they don’t get either, many are passing on name brands and living with generic goods. The automakers that posted higher U.S. sales in July did so through summer promotions and easier credit plans. P&G executives said they’ve noticed shoppers shift to cheaper brands. In response, the company has cut its prices, offered discounts and created lower-priced versions of some brands to hold onto customers. This explains why net income for the quarter was down to $2.2 billion from nearly $2.5 billion a year prior. “The economic recovery in the United States will be uneven,” Bob McDonald, president, CEO and chairman, told investors. “I think we are seeing that already. We don’t expect a double-dip recession … but we have got to keep innovating and keep growing.” Saving more and budgeting for purchases may be good for families. But it worries retailers, who employs 14.4 million Americans, or about 11 percent of total employment. Retailers stepped up hiring earlier this year after a solid winter holiday shopping season, then cut jobs in May and June as consumer spending slowed. Craig Johnson, president of retail consulting firm Customer Growth Partners, says stores would prefer Americans saved in the 3 to 4 percent range. But he expects shoppers to keep squirreling money away at the higher rate even through the Christmas holiday season. “This is a real sign that people are very cautious about spending,” he said. __ AP Business Writers Dan Sewell in Cincinnati, Anne D’Innocenzio and Eileen A.J. Connelly in New York, and Christopher S. Rugaber and Alan Zibel in Washington contributed to this report.

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Video: Magliano Sees Second-Half Auto Sales Missing Estimates: Video

August 3, 2010

Aug. 3 (Bloomberg) — George Magliano, director of North American research for IHS Automotive, talks about the outlook for U.S. auto sales. General Motors Co. and Ford Motor Co. reported sales in July that trailed analysts’ estimates as customers concerned about the economy avoided large purchases. Magliano talks with Margaret Brennan on Bloomberg Television’s “In Business.” (Source: Bloomberg)

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GM’s Chevy Volt Production To Be Boosted By 50 Percent To Meet Demand

July 30, 2010

DETROIT — General Motors said Friday that it is boosting production capacity for its new Chevrolet Volt due to strong public interest in the electric car that goes on sale this year. GM will now have a production capacity of 45,000 vehicles in 2012, up from previous plans for 30,000 vehicles. The automaker made the announcement as President Barack Obama toured the Volt production facility in Detroit. The federal government sank $50 billion into GM as part of the broader rescue of the auto industry, giving taxpayers a majority stake in the nation’s largest auto company. The Volt, priced at $41,000, can go 340 miles on a single battery charge, according to GM. The vehicle is powered purely by the battery in the first 40 miles, and then uses a small tank of gasoline to create an additional charge for the remaining 300 miles. Chevrolet dealers began taking orders this week for the 2011 model. GM recently raised the number of launch markets for the Volt from three to seven.

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Video: Schuster Sees `Progressive Recovery’ for U.S. Automakers: Video

July 30, 2010

July 30 (Bloomberg) — Jeffrey Schuster, executive director of global forecasting at J.D. Power & Associates, discusses the outlook for the U.S. auto industry and the prospects of an initial public offering by General Motors Co. President Barack Obama travels to the Detroit area today to visit a Chrysler plant and a GM facility that are adding production. Schuster speaks with Carol Massar on Bloomberg Television’s “In the Loop With Betty Liu.” (Source: Bloomberg)

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GM’s Chevy Volt Electric Car Will Cost $41K

July 27, 2010

DETROIT — General Motors Co. said Tuesday its Chevrolet Volt electric car will cost $41,000 when it goes on sale in November. While the price is about $8,000 more than its closest rival, the Nissan Leaf, GM said it will offer a $350-per-month lease deal that’s essentially equal to the Leaf’s. That will put the battery-powered Volt within reach of many people, GM said. Both cars also are eligible for a federal tax credit that will cut their prices by $7,500. The Volt’s price would fall to $33,500 while the Leaf’s would drop to $25,280 from $32,780. Some states, such as California, Georgia and Oregon, offer additional tax breaks that lower the price further. The Volt, a 4-door sedan, runs on battery power for up to 40 miles but has a small gasoline engine to generate electricity once the battery runs down. The gas engine can generate power to run the car another 300 miles. That’s a big selling point because some drivers worry about the battery going dead during trips. This so-called “range anxiety” dogged GM’s experimental EV-1 electric car in the 1990s. To give the car wider appeal, drivers must know “they’re not going to get stranded,” said Joel Ewanick, GM vice president U.S. marketing. Nissan’s Leaf, which goes on sale in December, can go up to 100 miles on a charge. The car doesn’t have a gas engine and must be recharged once its battery is depleted. Nissan spokeswoman Katherine Zachary said the Leaf itself emits no pollution and is designed for people whose daily travels are within its range. GM’s $350-a-month lease deal is for 36 months with $2,500 down. Nissan’s lease plan is $349 a month over the same period with $1,995 down. The lease deals are particularly appealing because they are close to those offered with conventional cars. But depending on how far they drive, drivers would not have to pay for gasoline. GM said it would cost about $1.50 worth of electricity to fully recharge the Volt each night. GM earlier this month offered an eight-year, 100,000 mile warranty on the Volt’s battery to allay fears that owners could get stuck with the hefty price of replacing the power pack. Nissan matched that warranty Tuesday, a day that saw competing electric car announcements from the two automakers. GM will sell the Volt first in California, then move to New York, New Jersey, Connecticut, Washington, D.C., Michigan and Texas. Orders are being taken at 600 Chevrolet dealers in those states. But in 12 to 18 months, dealers nationwide should offer the cars. Nissan said Tuesday that 17,000 people have placed orders for the Leaf so far in the U.S. Buyers in California, Washington, Oregon, Arizona and Tennessee will get the first Leaf deliveries in December. The Leaf will go on sale in other markets through 2011 and be available nationwide by the end of next year.

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Obama To Visit Big Three Auto Plants In Michigan, Illinois Next Week

July 23, 2010

WASHINGTON — President Barack Obama will visit U.S. auto plants in Michigan and Illinois next week to highlight his administration’s decision to rescue General Motors and Chrysler last year and revitalize the U.S. auto industry. Obama plans to use trips to General Motors and Chrysler plants in Detroit on July 30 and a Ford assembly plant in his hometown of Chicago on Aug. 5 to discuss the progress in the U.S. auto industry following the government-led bankruptcies of GM and Chrysler. White House press secretary Robert Gibbs said Friday that Obama will acknowledge the decisions to save GM and Chrysler were unpopular with many Americans but necessary to save hundreds of thousands of jobs and help rebuild the auto industry for the future. “The president believes that the decisions that we made around the auto industry are a parable for where we are economically. We had to make some tough and even unpopular decisions but those decisions are laying a new foundation for economic growth and a brighter future,” Gibbs said. GM and Chrysler received tens of billions of dollars in federal aid to undergo swift bankruptcies last year and have begun to show signs of rebounding. GM, which is majority-owned by the government, posted a quarterly profit in May and has repaid nearly $7 billion in loans from the U.S. government while preparing for an initial stock offering that could further repay taxpayers. Chrysler, which was placed under control of Italian automaker Fiat as part of its bankruptcy, posted a $143 million first-quarter operating profit. It has made sales gains during the spring and summer months. Ford did not receive federal aid, and announced a second quarter profit of $2.6 billion amid sales that far outpaced the rest of the industry. It was Ford’s fifth straight quarterly profit. Obama has tried to sell the administration’s work with the auto industry as one of the success stories of his recovery program. Obama will visit GM’s Hamtramck plant, which is gearing up to make the Chevrolet Volt rechargeable electric car. The plant is one of nine plants that the automaker will keep open during the typical two-week summer shutdown to boost production of popular models. In nearby Detroit, Obama will tour the Jefferson North Chrysler plant. It recently added a second shift of production, adding about 1,100 jobs to the plant. Workers there recently launched the new 2011 Jeep Grand Cherokee. The following week, Obama will tour the Chicago plant where Ford is building the new Explorer sport utility vehicle. The redesigned SUV, which will be revealed on Monday, is expected to show major improvements in fuel efficiency. The president will also raise money for Democrat Alexi Giannoulias, the Illinois state treasurer who is seeking Obama’s old Senate seat. Giannoulias has been outpaced in fundraising by Republican Mark Kirk, a congressman from Chicago’s northern suburbs.

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Financial Reform: Can It End Americans’ Addiction To Credit?

July 23, 2010

NEW YORK — The battle over financial regulation is finally over. Now comes the harder part: kicking Americans’ love of credit. The financial crisis didn’t happen just because banks, credit-card companies and mortgage lenders forced consumers to take on massive debt. We willingly gobbled up the easy credit they offered and used it to buy cars and houses, take vacations and go shopping. Then came the blowup. All that debt, matched with one in 10 Americans unemployed and plunging home prices, strangled our finances and ultimately, the overall economy. New regulations, which President Barack Obama signed into law on Wednesday, can only go so far to prevent future financial crises like the one we are living through. Banks will still lend. And many of us will borrow too much. “You can’t legislate diligence,” says Robert Lawless, an expert on consumer credit at the University of Illinois College of Law and a contributor to the blog Credit Slips. “You can’t pass laws that make people be careful when they take out loans.” There are already signs that lenders are eager to lure us back. Credit-card solicitations jumped 45 percent during the first half of this year to 884 million, according to estimates from research firm Synovate. And all that talk about limiting lending to consumers with risky credit profiles seems to be fading. Issuers mailed nearly 85 million credit-card offers to subprime borrowers during the first six months of 2010, double year-ago levels, Synovate estimates. That kind of growth has to do with one thing: The card issuers know they can make more money off of riskier borrowers because they can charge higher interest rates and annual fees, says Synovate’s Anuj Shahani. More evidence of credit expansion came Thursday when General Motors said it would buy subprime lender AmeriCredit Corp. for $3.5 billion in a deal that will let the automaker increase lending to customers with poor credit. GM executives say they miss sales opportunities due to lack of credit for lease deals and financing for buyers with low credit scores. “Clearly there’s an opportunity to bring more people into our showrooms and help them with finance,” GM chief financial officer Chris Liddell said after the deal was announced. Let’s be clear: not all borrowing is bad. Taking out a loan to buy a car is the kind of purchase that requires us to borrow. Having access to credit also keeps the economy going, since we can’t pay for everything with cash. However, we still need to be careful. Amazingly, the pace of consumer borrowing hasn’t fallen off that much, even in the wake of the recession and financial crisis. Mortgage lending has dropped, but borrowing on credit cards and other loans, such as for autos, is only slightly below historical levels. Federal Reserve data shows consumer borrowing ran at an annual rate of $2.42 trillion in May. That was the 15th decline in 16 months, but the amount is still on par with the winter of 2007, when credit was still booming. The new rules might get rid of the riskiest loans in the marketplace. Regulators will be able to ban financial products they think are unsafe or outlaw things that might be confusing, like the fine print on credit card or mortgage applications. Mortgage lenders will also be required to verify a borrower’s income, credit history and employment status. Those are good first steps, but they’ll be meaningless if Americans continue to ignore the basics rules of avoiding credit disasters. We have to understand the kinds of loans were are getting, and whether we can afford them. An adjustable-rate mortgage isn’t a bad thing on its own, but it can be if you don’t realize your rate could go from 2 percent to 10 percent five years from now. We don’t need a wallet full of credit cards. We have to save more. We have to read the disclosures on every loan we get. “You can’t force people into long-term financial stability,” says Todd Mark, vice president of education at the Consumer Credit Counseling Service of Greater Dallas. “Plenty of people still don’t understand the dangers of debt.” Mark and other credit counselors worry what happens next, when the economy improves and credit flows more freely. If the unemployment rate finally retreats, the bingeing could come back, maybe even more than before. “When credit is easy, it can be rational to over-borrow,” says Lawless of the University of Illinois. Unless Americans radically change their approach to credit, we know where this story goes in five or 10 years. It will look a lot like the mess we’re in today. ___ Rachel Beck is the national business columnist for The Associated Press. Write to her at rbeck(at)ap.org

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Shanshan Du, Ex-GM Worker, Allegedly Tried To Sell Hybrid Car Secrets To Chinese Companies

July 23, 2010

DETROIT — A former General Motors engineer and her husband conspired to steal trade secrets about hybrid technology and use the information to make private deals with Chinese competitors, according to a federal indictment unsealed Thursday. Shanshan Du and Yu Qin, both of Troy, were indicted on conspiracy, fraud and other charges. They had been under scrutiny for years and were charged in 2006 with destroying documents sought by investigators, a case that was dropped while a broader probe was pursued. The indictment says Du, who was hired at GM in 2000, purposely sought a transfer in 2003 to get access to hybrid technology and began copying documents by the end of that year. In 2005, she copied thousands of documents, five days after getting a severance offer from the automaker, according to the indictment. By that summer, Qin was telling people he had a deal to provide hybrid technology to Chery Automobile, a GM competitor in China, the indictment says. The couple had set up their own company, Millennium Technology International. Outside court, Assistant U.S. Attorney Cathleen Corken said there’s no indication the Chinese benefited. Jin Yibo, a Chery spokesman in China, said early Friday that the company saw a news report about the case but knew nothing else about it. “We are surprised about why anyone connected this with Chery. This is ridiculous,” Jin said. Du, 51, and Qin, 49, were arrested Thursday and remained mostly silent during a court appearance where they waived a reading of the indictment. Not-guilty pleas were entered for them. The maximum penalty if convicted is 20 years in prison. “Theft of trade secrets is a threat to national security,” Andrew Arena, head of the FBI in Detroit, said in a statement. Du’s attorney, Robert Morgan, declined to comment. Qin’s attorney, Frank Eaman, said he was “completely surprised” by the indictment. “This investigation has been going on so long I figured if they had a basis they would have charged them a long time ago,” Eaman said. Corken said GM learned about the alleged theft and called the FBI. GM estimates the value of the stolen information at $40 million. In May 2006, Du and Qin were charged with destroying records to stifle an investigation of them. FBI agents followed them to a major grocery store where Qin approached a Dumpster, according to a court filing at the time. Agents later retrieved shredded documents. That criminal complaint was dropped less than two months later, a common move when investigators want to further develop a case. The indictment includes an obstruction of justice charge against Qin for the alleged Dumpster incident. Du and Qin, both U.S. citizens, were released on bond and ordered to mostly stay in the Detroit area.

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Pay Czar Kenneth Feinberg Expected To Criticize 17 Banks For ‘Ill-Advised’ Payments To Execs

July 22, 2010

Kenneth Feinberg , the Obama administration’s “pay czar,” is set to slam the leadership of 17 bailed-out banks and other financial institutions that provided their executives with generous compensation packages while the financial system collapsed. In an announcement scheduled for 10 a.m. Friday, Feinberg plans to criticize the compensation plans of financial titans including JPMorgan Chase, the Associated Press reports. Other news reports include Goldman Sachs on the list of firms Feinberg will name. Bloomberg BusinessWeek estimates the total funds spent on “unwarranted or ill-advised” payments to executives at more than $1 billion. Here’s the AP: Feinberg has been reviewing pay at all 419 companies that took bailout money before pay curbs were enacted in February 2009. The bailouts started in October 2008 as the financial system teetered amid fears about the plummeting value of mortgage investments. Feinberg can’t force the banks to return the money. Most of the banks on the list have already repaid the government. Until now, Feinberg’s authority was limited to the seven companies that took the biggest bailouts: Citigroup Inc., Bank of America Corp., American International Group Inc., General Motors, GMAC, Chrysler and Chrysler financial. His influence shrank as some companies repaid enough bailout money to escape his oversight. Given that Feinberg lacks the power to “claw back” the money, Salon’s Andrew Leonard wonders why Feinberg is bothering to subject the banks to a public shaming. After all, Individual bank executives won’t be named and it’s unclear what, if anything, specific we’ll learn about individual company’s excesses. Here’s Leonard: If Feinberg doesn’t have the legal authority to ask that financial institutions which escaped bankruptcy through the grace of a Federal bailout return a paltry billion dollars worth of ill-gotten gains, what’s the point of citing them? We already know that Wall Street has no shame; I don’t think they’re going to be responsive to some nasty name-calling.

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Video: Hindery Discusses GM’s Agreement to Buy AmeriCredit: Video

July 22, 2010

July 22 (Bloomberg) — Leo Hindery, managing director at InterMedia Partners LP, discusses General Motors Co.’s agreement to buy subprime lender AmeriCredit Corp. for $3.5 billion. Hindery talks with Betty Liu on Bloomberg Television’s “In the Loop.” (This report is an excerpt of the full interview. Source: Bloomberg)

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Christopher Weber: Why the GM and Chrysler Bankruptcies Foreshadow Big Problems for the Gulf Cleanup

July 16, 2010

After BP’s financial travails — falling stock, mounting claims — financial analysts everywhere are uttering the dreaded B word. Incredibly, it seems that an energy company recently valued at $200 billion could go bankrupt. As BP executives reiterate pledges to pick up the tab for stained beaches and soiled pelicans, another messy industrial cleanup is unfolding a thousand miles to the north, in the Midwest’s auto-manufacturing belt. General Motors and Chrysler are the chief culprits there. The automakers own hundreds of contaminated properties where they once made cars and car parts. Like so many oil-stained communities along the Gulf, former auto towns throughout the Midwest are waiting for a thorough going environmental cleanup. And like the Gulf communities, they hope that cleanup will help bring about a full economic recovery. Some have been waiting for years, even decades, for GM and Chrysler to finish the job. Will the communities of the Gulf Coast ultimately fall into a similar state of limbo? Right now, the daily stress and uncertainty demands their energy, but in the months ahead, many may learn a lesson that Midwesterners have known for a long time: The difficulty of making a big corporation pay for its mess increases exponentially once it declares bankruptcy. Herein lies a cautionary tale for Congress, environmentalists, and the people of the Gulf Coast. As much as they want BP to pay through the nose, they should beware a bankrupt BP, which could use bankruptcy laws to shed its responsibility to pay for environmental cleanup. “If GM doesn’t pay, there’s a real danger that the cleanup costs will fall back on the taxpayer.” That’s Kevin Smith speaking. He’s the former mayor of Anderson, Indiana, a city of 50,000 that made millions of starting motors, horns, and headlamps for GM. Smith worked closely with GM to clean up nearly a dozen former plants, but work stopped when GM went bankrupt. Now, the city is seeking $9.2 million from the automaker to finish the job. The court handling GM’s bankruptcy may award the funds; it may not. Either way, someone has to clean up the polluted 90-acre field where that headlamp plant once stood. A former auto plant does not look much like a white-sand beach, but the net effect is the same: An asset converted to a costly albatross. An oily albatross, if you want to mix metaphors. Unlikely Pairing: A bankrupt BP might delay or seek to avoid paying for environmental cleanup along the Gulf Coast (below, AP), just as General Motors has left this contaminated factory site in Anderson, Indiana, untouched (above). “When companies leave huge environmental pollution from their operations, local governments suffer the brunt of the problems,” says Matt Ward. He’s the policy director for the Mayors Automotive Coalition, a group of 50 municipalities that have banded together to rebuild communities devastated by plant closures. “Local communities have to deal with the contaminated property as well as lost jobs, lost tax revenue, increasing foreclosures, demands for social and poverty services, and the stigma that drives away future economic development.” When the companies responsible go bankrupt, cleanup efforts are often put on hold, prolonging the crisis. “When the company has no resources, it is bad news for communities,” Ward concludes. BP is plenty different than the American automakers, of course. For one thing, it has no problem making a profit. And unlike GM and Chrysler, it never owned the waters and beaches its crude has fouled. But when it comes to the all-important question of who pays, a bankrupt BP may quickly start to resemble GM and Chrysler, which have been widely criticized for insufficiently funding their cleanup obligations. “We’re still trying to calculate the environmental cleanup costs that GM and Chrysler have left to be borne by the public,” notes Jackie Gardina, an attorney, professor at Vermont Law School, and authority on the environmental consequences of bankruptcy. If BP declares bankruptcy, its oft-repeated promise to “pay all reasonable claims” goes out the window. “If BP were to file for bankruptcy, the government will be unable to hold the company fully accountable for the as-yet-unknown costs of this unprecedented environmental catastrophe,” Gardina says. “Bankruptcy courts struggle to find a balance between the ‘polluter pays’ principle of our environmental laws versus the bankruptcy.” Gardina says that only Congress, not the courts, can truly make corporate polluters accountable. It can arrange liens on BP’s assets or revise the bankruptcy code to provide less wiggle room for corporate polluters. Moreover, she notes that the Obama administration can request a “security interest” in BP’s property to guarantee the costs associated with the spill. Bottom line, Congress and President Obama must close the loophole that makes bankruptcy so useful for BP and other corporate polluters. Otherwise, we may one day speak of the Gulf Coast as the new Rust Belt — the Tar Belt, if you will.

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Ken Blackwell: GM’s Move Away from ‘Government Motors’

July 13, 2010

My friend Matt Lewis recently authored a thoughtful column about General Motors . As he pointed out, regardless of how one feels about the government bailout of GM — which he and I both vigorously opposed — there is reason for optimism about the company’s future. To be sure, there is an argument to be made for conservatives to actually root for GM’s continued failure. Presumably, this would lessen the odds that the government would attempt such a heavy-handed maneuver in the future. But as a former Cincinnati Mayor — and Treasurer of State of Ohio (another state struggling to adapt from a manufacturing economy to an information economy) — my strong philosophical opposition to bailouts is tempered by my realization that the decision was made, and now we must move forward. It’s also important for someone to make this point before it’s too late — if GM does succeed at turning things around, it should not be construed as “proof” the bailout “worked,” nor should President Obama attempt some sort of victory tour to score political points. For one thing, it’s impossible to say that bailing out GM — even if GM turns things around — was good. It very well may be that allowing GM to fail would have forced the industry to modernize, and would have allowed competitors like Ford to gain market share. We can have that debate, but that’s water under the bridge now. It’s too early to predict how things will play out (I’ll be more charitable toward GM once the taxpayers are fully compensated, and once the government no longer owns stock in the company), but evidence suggests the new GM regime is miraculously attempting to implement conservative free market principles. Should GM succeed in achieving long-term profitability, the credit will belong to the new leadership, not the federal government. Based on early reports, it seems the old days of GM producing cars that no one really wanted and then offering steep discounts just to move subpar products, are over. Also gone are the days when GM was in a variety of businesses that were unrelated to the automobile industry. Now the company concentrates solely on producing high quality cars, trucks and SUVs, nothing else. I’m told that within GM there is a deep desire to pay back the government loan and turn the company around to permanent profitability. Again, I will believe it when I see it, but, so far, indications are positive that GM will do just that. It’s also worth noting that General Motors’ June U.S. sales rose 11 percent from the same month last year. Sales of GM’s Camaro, Malibu, and its family SUV, the Equinox, are flourishing The Camaro outsold Ford’s Mustang for 11 straight months until Ford was forced to offer big incentives to lure buyers. Ten GM models ranked in the Top 3 of their segment, more than any other manufacturer and GM now boasts four award winning models; Tahoe; Avalanche; Sierra LD and the Escalade. Motor Trend recently reported, “Buick Is Back,” and featured a story applauding the brand’s quality and performance. In addition, the company has completely restructured its labor agreement to bring its labor costs in line with what Toyota is paying. The company has inked a new contract with labor that includes a “no-strike” provision that extends beyond five years. GM also now has more flexibility to bring on temporary skilled and non-skilled workers to keep plants open and production lines running. Within a few months, I am sure we will see a high profile victory tour by members of the Obama Administration who will want to claim a lion’s share of the credit for GM’s turnaround. But make no mistake about it, if GM turns the corner, it will be the result of new leadership by a determined CEO who is demanding a strong work ethic and utilizing sound free market principles to return General Motors to icon status within the automobile industry.

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Nancy Lublin: The Power of ZERO in Business: Finances

July 1, 2010

Not-for-profits use money in a completely different way from our for-profit siblings. Our goal isn’t to maximize profit and we don’t use the “industry standard” to measure return on investment. So why should you listen to us not-for-profits? Simply, the best not-for-profits have incredible fiscal policies that are great at navigating through fiscal shakiness and emerging unscathed. Here are three simple lessons from terrific not-for-profits that will help you build a better corporate fiscal policy. 1. Strive for diversified revenue . General Motors was heavily invested in gas-guzzling SUV’s and investment banks felt home-mortgage gravy train had no end. We all know how the latest down turn went for GM and Bear Sterns. On the converse, the Greater Boston Food Bank (TGBFB), the largest hunger relief organization in New England, is an excellent example of a not-for-profit with diverse income streams. Not a single income stream accounts for more than 45% of income. I’m not advocating product diversity but income-stream diversity. Do you have income diversity or does your revenue come from one source? 2. Transparency is vital . Everyone remembers Enron, WorldCom, and more recently Bernard L. Madoff Investment Securities. Transparency is a way of life for not-for-profits. The IRS Form 990, our public financial information, goes far beyond anything you’ll find in a 10K or 10Q SEC filing. All of our expenses are itemized and public – literally, you can see what we pay for postage, telephone, everything. I suggest you move toward a high degree of transparency — this engenders trust and your company will think long and hard about how every dollar is allocated. 3. Live in fear of overhead . Not-for-profits fear overhead – it’s a monster we work hard to avoid. Every person at a well-run not-for-profit is diligent about limiting his or her contribution to overhead. Imagine if literally everyone in your ginormous for-profit company felt personally responsible for corporate spending. My advice – Live in fear of overhead and instead of thinking about what is necessary, think in terms of what is and is not directly related to your product or service. Nancy’s latest book Zilch: The Power of Zero in Business is now available. Written with James C. Elbaor

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Steve Parker: EV-Builder Tesla’s IPO Raises $226 Million in One Day

June 30, 2010

It looks like the little EV maker who could has done it again. Just a few weeks after announcing an infusion of $50 million from Toyota, and a deal with Toyota to re-open the New United Motor Manufacturing plant where Teslas will be built, the company, headquartered in San Carlos, CA, today became the first U.S. car-maker to launch a public stock offering in 54 years. The stock surged almost 41 percent in its first day of trading even as broader markets were plummeting. Tesla finished the day with a gain of $6.89, to $23.89 a share. Tesla, the electric car company that counts Daimler and Toyota among its shareholders, raised $226 million selling shares Monday above its forecast price range. The maker of the $109,000 electric Roadster bought by Brad Pitt and George Clooney started trading on the Nasdaq Stock Market under the ticker TSLA. A Tesla dealership in trendy West Los Angeles, CA The company will go through a fair chunk of 2011 without any products for sale, thanks to tooling changes at a supplier. Production will resume only in 2012 when the mass-market Model S comes online. Tesla founder Elon Musk, a creator of PayPal, was in New York today and said his company could be profitable if it continued to make pricey sports cars, but is instead forgoing income to build a car aimed at mass-market commuters. “A lot of people were puzzled about why we were going public without profits,” Musk, dressed in jeans and an unbuttoned shirt, told reporters outside the Nasdaq building in Times Square, near several Tesla Roadsters. Tesla founder Elon Musk with California Governor Arnold Schwarzenegger; the small car company has deep ties to big money as well as influential politicians “The reason we are not profitable today is because we are in the midst of expanding with the Model S,” Musk added. Model S is a luxury electric sedan it plans to launch in 2012 and to sell starting from $57,400. The IPO was the first by an American car company since Ford Motor Company in 1956. Until that time, Ford was owned exclusively by members of the Ford family. General Motors is planning their own IPO to get the company back in public hands and out of the White House. The company has put a big push on new models for overseas markets in advance of the stock offering, expected at the end of this summer.

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General Motors Director Kresa Said to Retire as Soon as July, Before IPO

June 18, 2010

By David Welch June 18 (Bloomberg) — General Motors Co. board member Kent Kresa , who served as interim chairman during the automaker’s bankruptcy, will retire as a director as soon as July, said two people with direct knowledge of the matter. Kresa, who joined the board in 2003, turned 72 in March and will not stand for re-election, said the people, who asked not to be identified revealing internal discussions. GM added a 13th director, Cynthia Telles , an associate clinical professor at the University of California at Los Angeles, in April and she will take Kresa’s place when he retires, the people said. The departure would leave four directors from the old General Motors Corp. and eight who joined since the new GM emerged from bankruptcy. That may help GM convince potential investors its board has a fresh perspective as it prepares for an initial stock sale, said Charles Elson , director of the John L. Weinberg Center for Corporate Governance at the University of Delaware. “New blood would probably make some sense,” said Elson. Kathryn Marinello , another director, tendered her resignation from GM’s board after she left her last job as chairman and CEO of Minneapolis-based human resources firm Ceridian Corp. in January. GM’s corporate governance guidelines state that when a director’s job changes “from the position he or she held when originally invited to join the board, the director will tender a letter of resignation.” Board Reviews The board reviewed Marinello’s situation and decided to keep her as a director, said a company spokeswoman, Renee Rashid-Merem . Kresa’s status is under review, she said, because directors who are 72 or older do not stand for re-election under GM’s guidelines. The board kept Marinello, 53, as a director with the expectation that she will find a new job before GM holds an IPO in the fourth quarter of this year or first quarter of next year, one of the people said. If she does not, she may have her directorship reviewed again and have to resign her seat, the person said. Directors who lose their executive jobs often stay on boards long after leaving employment, said Elson. “It’s rare that the resignation letters are even accepted,” he said. “The value that they bring to the board is not the job that they had. Often they do stay on.” Kresa, a former chairman and CEO of Northrop Grumman Corp., was named GM’s interim chairman in March 2009 by President Barack Obama ’s Automotive Task Force after the government fired Chairman and CEO Rick Wagoner . Kresa helped recruit some of the seven directors who joined when GM emerged from bankruptcy in July. Kresa didn’t immediately return a telephone message about the matter. Marinello wasn’t available for interviews, Rashid- Merem said. GM’s equity is worth $70 billion, based on a return of 47 cents on the dollar for holders of bonds issued by GM’s predecessor, according to Eric Selle , a debt analyst at JPMorgan Chase & Co. The debt will be converted to stock and warrants in the IPO. At current bond prices, GM’s implied equity value is about $51 billion. To contact the reporter on this story: David Welch in Southfield, Michigan, at dwelch12@bloomberg.net .

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Ferrari Designer Jason Castriota Hired by Saab Auto to Speed Turnaround

June 18, 2010

By Ola Kinnander June 18 (Bloomberg) — Jason Castriota, the U.S. designer known for creating the Ferrari P4/5 and Maserati GranTurismo, will head Saab Automobile’s design team to help the Swedish carmaker take on Bayerische Motoren Werke AG and Audi AG. The first assignment for Castriota’s design firm is to create an upscale version of Saab’s current 9-3 model, scheduled for release in 2012, the 36-year-old said in an interview. Aerodynamics will be a focus of the new design, he said. “It’s absolutely vital we get this car right,” Castriota said from New York late yesterday. “This is Saab returning to its roots, not having to worry about being part of a much larger machine that they were before in the GM organization.” Saab, sold by General Motors Co. to Dutch supercar maker Spyker Cars NV in February, aims to become profitable by 2012. The turnaround strategy includes releasing premium models more distinct and sporty in their design than when Saab was under GM, according to Spyker Chief Executive officer Victor Muller . Castriota will play a major role in fashioning the new 9-3 and other models, said Eric Geers , a spokesman for the Trollhaettan, Sweden-based Saab. “The 9-3 design as made by him is basically done, and I can tell you it is spectacular,” Muller said by telephone, adding that the design will be completed within weeks. “It is truly aircraft-inspired and Swedish-clean.” Benchmark Cars The 9-3 was first released in 1998. The second generation, still produced today, hit the streets in 2002. The new version intends to challenge BMW’s 3-series and Volkswagen AG ’s Audi A4, Castriota said. “Those are the benchmark cars,” he said by telephone. “They’re true premium vehicles and the 9-3 also needs to be a true premium vehicle.” Castriota started his career in 2001 at luxury-car designer Pininfarina SpA in Turin, Italy, where he stayed until 2008. He then worked for Stile Bertone in Italy until September 2009. Last December, he started his own firm, Jason Castriota Designs. The design house has five designers and is based in New York City and Turin. “I literally started sketching Ferraris when I was about five years old,” he said. “For whatever reason, some kids might kick around a soccer ball, I picked up a pencil and started sketching cars.” BMW Talks Castriota will become part of the leadership at Saab and will help “define the strategy for the new models,” he said. Saab is also planning to introduce a smaller car with a tear-drop shape inspired by the 92 model that was in production between 1949 and 1956. Saab is in talks with BMW about using its Mini platform, as well as engines and gearboxes, for that model, two people familiar with the situation said last week. “A small premium car from Saab is a very important vehicle and is something that could truly help the overall production volume of Saab in a great way,” Castriota said. To contact the reporters on this story: Ola Kinnander in Stockholm at okinnander@bloomberg.net ; Andreas Cremer in Berlin at acremer@bloomberg.net

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UAW President King Says Union Will Focus on Organizing U.S. Toyota Workers

June 17, 2010

By Keith Naughton June 17 (Bloomberg) — Bob King , elected yesterday as the 10th president of the United Auto Workers union, said organizing the U.S. factory workers of foreign companies such as Toyota Motor Corp. is his “No. 1 priority.” “If we don’t support Toyota, Honda, Nissan, Hyundai, Kia and all the non-union plants by supporting the right to organize, we cannot win back the concessions we have given up,” King said in his first address today to delegates at the UAW’s constitutional convention in Detroit. King, 63, succeeded Ron Gettelfinger , 65, who helped persuade President Barack Obama to organize rescues of General Motors Co. and Chrysler Group LLC last year. King takes over amid calls from workers to restore the wages and benefits they gave up to bolster the industry, and as membership in the union has fallen to 355,000 from 1.5 million in 1979. UAW members who work for U.S. automakers have each given $7,000 to $30,000 in concessions in the past five years, King said last month. The union surrendered raises, bonuses and cost- of-living adjustments at GM, Ford Motor Co. and Chrysler. It agreed to a two-tier wage system, in which new hires earn about $14 an hour, half the amount paid to hourly production workers. “The only way we can get back what we’ve sacrificed is by coming up with a comprehensive strategy to rebuild the power of the UAW,” King said. Toyota’s Mississippi Plant King also criticized Toyota President Akio Toyoda for moving forward with plans to open a non-union factory in Mississippi after closing the assembly plant it had operated in Fremont, California. The Japanese automaker’s joint venture with pre-bankruptcy GM was its only U.S. plant where workers were represented by the UAW. “The only reason they closed that plant is because it was a UAW plant,” King said. “Mr. Toyoda if you care about safety and quality in America, you’ll go back to Fremont and build Corollas there and not in Mississippi.” Toyota, the world’s largest automaker, will begin installing assembly equipment at the facility in Blue Springs, Mississippi, with a goal of starting production of Corolla compact cars by late 2011, the company said today in a statement. The decision reverses earlier plans to use the plant to build Highlander sport-utility vehicles and Prius hybrids. King said the UAW will conduct protests at Toyota dealerships. ‘Crazy’ Decision “We’re going to show these corporations that if they do something unjust to our members, they’ll pay a price,” King said after his speech, calling the California plant closing “a crazy business decision.” After the convention adjourned, King led the 1,200 delegates along with Teamsters President James P. Hoffa on a march on Detroit’s banking district to protest against Wall Street lending practices. The demonstration was part of a new social activism the union will undertake, King said. “We’ve been under attack for eight years and we hunched down and protected the union,” King told the crowd from the back of a flatbed truck. “We will never have the justice we deserve if we’re not part of a much broader social movement.” The recession triggered by the financial crisis that began in 2008 led to a 35 percent industrywide plunge in U.S. auto sales from 2007 to 2009. Sales this year through May rose 17 percent. As auto sales recovered in the first quarter, GM posted net income of $865 million, Chrysler had an operating profit of $143 million and Ford reported earnings of $2.1 billion. The automakers are boosting production, expanding plants and hiring workers. GM said today it will operate 9 of 11 U.S. assembly plants through the customary summer shutdown because flexibility allowed under the new UAW contract allows the automaker to respond to customer demand. The move will boost GM’s output by 56,000 vehicles. To contact the reporter on this story: Keith Naughton in Detroit at Knaughton3@bloomberg.net .

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Nissan, Hyundai Lead Asian Carmakers’ May U.S. Sales Gains on Incentives

June 2, 2010

By Alan Ohnsman June 3 (Bloomberg) — Nissan Motor Co. and Hyundai Motor Co. led U.S. sales gains in May for the biggest Asia-based automakers as improving consumer confidence helped sustain a recovery in demand. Nissan, Japan’s third-largest automaker, yesterday reported a 24 percent increase from a year earlier, while Seoul-based Hyundai said its sales rose 33 percent. Toyota Motor Corp. , the world’s biggest automaker, posted a 6.7 percent gain and Honda Motor Co. ’s were up 19 percent. “Nissan and Hyundai have been judicious with their use of incentives,” with the South Korean automaker’s sales increase led by the Sonata sedan, said James Bell , executive market analyst for Kelley Blue Book in Irvine, California. “These great percentage gains are also in light of the depths of despair we were at a year ago.” U.S. auto sales rose 19 percent last month as consumers returned to dealer lots after 2009’s recession triggered the weakest market in decades. Consumer confidence in May rose to the highest level since March 2008, based on the Conference Board’s index . Asian carmakers lost ground to U.S.-based competitors, with 45.1 percent of the market in May compared with 47.2 percent for General Motors Co., Ford Motor Co. and Chrysler Group LLC. Sales rose 17 percent at GM, 22 percent at Ford and 33 percent at Chrysler. Toyota Toyota sold 162,813 Toyota, Lexus and Scion vehicles, an increase from 152,583 a year earlier. The Toyota City, Japan- based company’s U.S. market share fell 1.7 percentage points to 14.8 percent, according to Autodata Corp., as its growth trailed the industry’s for the month. Toyota added no-interest loans and discounted leases on most of its top-selling U.S. models to spur sales in April and May after record recalls related to unintended acceleration. Bob Carter , U.S. vice president of Toyota-brand sales, said in a conference call yesterday that the company is extending no- interest loans to 2011 Camry sedans, Corolla and Matrix small cars, RAV4 sport-utility vehicles and some versions of its Tundra pickup. The automaker will also continue to provide two years of no-cost maintenance on all new Toyotas, he said. Toyota in U.S. advertising this month plans to start promoting the “Star Safety System” that’s being added to all 2011 models, Carter said. Honda, Nissan Honda, Japan’s second-largest automaker, said its sales rose to 117,173 Honda and Acura vehicles, from 98,344. The Tokyo-based company benefited from demand for Accord sedans, Civic small cars and CR-V and Pilot SUVs. Honda’s market share for May was unchanged at 10.6 percent, according to Autodata. Nissan reported sales of 83,764 Nissan and Infiniti vehicles, an increase from 67,489. The Yokohama, Japan-based company’s gains were led by the Altima sedan, Cube wagon, Sentra and Versa small cars and compact Rogue crossover, said Al Castignetti , vice president of U.S. sales. “We’re starting to see some relaxation of credit terms, so it seems it was getting easier for customers to get financing,” Castignetti said yesterday in an interview. “The market is continuing to come back.” Nissan’s market share rose 0.3 point in May to 7.6 percent, Autodata said. Toyota’s American depositary receipts gained 53 cents to $72.05 yesterday in New York Stock Exchange composite trading . Honda’s ADRs rose 16 cents to $30.20 in New York, and Nissan’s advanced 2 cents to $14.23 in over-the-counter trading. Hyundai, Kia Hyundai, South Korea’s largest automaker, reported a May sales record of 49,045 vehicles, rising from 36,937 a year earlier. The revamped Sonata sedan surged 92 percent to 21,196. “The story at Hyundai is really all about natural, organic growth,” said Jesse Toprak , an analyst at TrueCar.com in Santa Monica, California. “Sonata is now a true Camry fighter. It speaks to what consumers want in a midsize sedan, in terms of design, features and price.” Hyundai’s market share grew to 4.4 percent in May, from 4 percent a year earlier, according to Autodata. Kia Motors Corp. , Hyundai’s affiliate, also posted a May record, with a 21 percent advance to 31,431 vehicles from 26,060. The Seoul-based company was helped by the new Sorento SUV that it began building in West Point, Georgia, this year. To contact the reporter on this story: Alan Ohnsman in Los Angeles at aohnsman@bloomberg.net

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Nissan, Hyundai Lead Asian Carmakers’ May U.S. Sales Gains on Incentives

June 2, 2010

By Alan Ohnsman June 3 (Bloomberg) — Nissan Motor Co. and Hyundai Motor Co. led U.S. sales gains in May for the biggest Asia-based automakers as improving consumer confidence helped sustain a recovery in demand. Nissan, Japan’s third-largest automaker, yesterday reported a 24 percent increase from a year earlier, while Seoul-based Hyundai said its sales rose 33 percent. Toyota Motor Corp. , the world’s biggest automaker, posted a 6.7 percent gain and Honda Motor Co. ’s were up 19 percent. “Nissan and Hyundai have been judicious with their use of incentives,” with the South Korean automaker’s sales increase led by the Sonata sedan, said James Bell , executive market analyst for Kelley Blue Book in Irvine, California. “These great percentage gains are also in light of the depths of despair we were at a year ago.” U.S. auto sales rose 19 percent last month as consumers returned to dealer lots after 2009’s recession triggered the weakest market in decades. Consumer confidence in May rose to the highest level since March 2008, based on the Conference Board’s index . Asian carmakers lost ground to U.S.-based competitors, with 45.1 percent of the market in May compared with 47.2 percent for General Motors Co., Ford Motor Co. and Chrysler Group LLC. Sales rose 17 percent at GM, 22 percent at Ford and 33 percent at Chrysler. Toyota Toyota sold 162,813 Toyota, Lexus and Scion vehicles, an increase from 152,583 a year earlier. The Toyota City, Japan- based company’s U.S. market share fell 1.7 percentage points to 14.8 percent, according to Autodata Corp., as its growth trailed the industry’s for the month. Toyota added no-interest loans and discounted leases on most of its top-selling U.S. models to spur sales in April and May after record recalls related to unintended acceleration. Bob Carter , U.S. vice president of Toyota-brand sales, said in a conference call yesterday that the company is extending no- interest loans to 2011 Camry sedans, Corolla and Matrix small cars, RAV4 sport-utility vehicles and some versions of its Tundra pickup. The automaker will also continue to provide two years of no-cost maintenance on all new Toyotas, he said. Toyota in U.S. advertising this month plans to start promoting the “Star Safety System” that’s being added to all 2011 models, Carter said. Honda, Nissan Honda, Japan’s second-largest automaker, said its sales rose to 117,173 Honda and Acura vehicles, from 98,344. The Tokyo-based company benefited from demand for Accord sedans, Civic small cars and CR-V and Pilot SUVs. Honda’s market share for May was unchanged at 10.6 percent, according to Autodata. Nissan reported sales of 83,764 Nissan and Infiniti vehicles, an increase from 67,489. The Yokohama, Japan-based company’s gains were led by the Altima sedan, Cube wagon, Sentra and Versa small cars and compact Rogue crossover, said Al Castignetti , vice president of U.S. sales. “We’re starting to see some relaxation of credit terms, so it seems it was getting easier for customers to get financing,” Castignetti said yesterday in an interview. “The market is continuing to come back.” Nissan’s market share rose 0.3 point in May to 7.6 percent, Autodata said. Toyota’s American depositary receipts gained 53 cents to $72.05 yesterday in New York Stock Exchange composite trading . Honda’s ADRs rose 16 cents to $30.20 in New York, and Nissan’s advanced 2 cents to $14.23 in over-the-counter trading. Hyundai, Kia Hyundai, South Korea’s largest automaker, reported a May sales record of 49,045 vehicles, rising from 36,937 a year earlier. The revamped Sonata sedan surged 92 percent to 21,196. “The story at Hyundai is really all about natural, organic growth,” said Jesse Toprak , an analyst at TrueCar.com in Santa Monica, California. “Sonata is now a true Camry fighter. It speaks to what consumers want in a midsize sedan, in terms of design, features and price.” Hyundai’s market share grew to 4.4 percent in May, from 4 percent a year earlier, according to Autodata. Kia Motors Corp. , Hyundai’s affiliate, also posted a May record, with a 21 percent advance to 31,431 vehicles from 26,060. The Seoul-based company was helped by the new Sorento SUV that it began building in West Point, Georgia, this year. To contact the reporter on this story: Alan Ohnsman in Los Angeles at aohnsman@bloomberg.net

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