Secondhand car deal - Update 1
The automotive team of Obama (whatever that may be), has come to some conclusions yesterday evening.
1. Chrysler cannot survive on a stand-alone basis
2. GM needs a new plan
And to hide the fact that this work should have been done before handing out the first billions, Obama has asked the CEO of GM, Rick Wagoner, to step down.It seems that the government is pushing GM towards a Chapter 11, or a full nationalisation, which would change the name of GM from General Motors into Government Motors.
Chrysler's problems can be solved when it forms a bigger group with for instance Fiat. GM on other hand, has to get rid of charges that will continue to make the company uncompetitive for the foreseeable future:
G.M. and Chrysler have almost exhausted the combined $17.4 billion in federal aid they have received since December. G.M. has asked for up to $16.6 billion more, and Chrysler has requested another $5 billion.
Bondholders are under pressure to convert two-thirds of the $27 billion owed them into G.M. stock, while the
United Auto Workers
union is being asked to substitute stock for 50 percent of their health care benefits for retirees. Both groups have resisted those changes.
The problems that have pushed GM in problems and towards a Chapter 11 have an awkward resemblence with those of the Belgian economy: excessive social costs, wrong choice of model(s) and a lack of competitiveness.