GM says bankruptcy now more probable since US government moved to reject the automaker's recovery plans, writes MICHAEL McALEER, Motoring Editor
GENERAL MOTORS, surviving on $13.4 billion in government aid, spent $2.8 million on lobbying during the first three months of 2009, according to disclosures filed this week with the US authorities.
“Like any quarter, our reporting and expenses reflect the level of activity that we’re engaged in, and the breadth of issues that affect our business,” Greg Martin, a GM spokesman, said. “As being part of what is arguably one of the most regulated industries in the country, you have a voice to add to complex policy discussions and you report it.”
In a separate report this week, a US government auditor said the treasury will give GM $5 billion in additional aid.
The treasury has said it will provide GM and Chrysler working capital as the companies face deadlines to restructure or lose federal support. Chrysler will get $500 million more from the Troubled Asset Relief Program (Tarp), its special inspector general said in a report.
GM chief executive Fritz Henderson said last week the automaker probably will need $4.6 billion more this quarter. Detroit-based GM has until June 1st to strike debt-cutting deals with unions and bondholders and further trim jobs and operations or face a government-backed court restructuring.
Henderson has said bankruptcy is more probable after the Obama administration moved last month to reject the automaker’s February plan to return to profits and asked former chief executive Rick Wagoner to resign. In March, the treasury announced a program to back-up warranties on new GM and Chrysler vehicles if the two companies were to liquidate or otherwise not be able to honour the agreements.
The program, which took effect on March 30th, has an estimated cost to the government of $1.25 billion, according to the inspector general’s report.
Chrysler received $4 billion from the US government in January and has a May 1st deadline to create an alliance with Italian automaker Fiat to receive up to $6 billion more in US assistance.
Fiat chairman Luca Cordero di Montezemolo said yesterday the company will review the status of talks with Chrysler on Thursday and “doesn’t exclude anything” in terms of further alliances for the Italian automaker. The Italian firm’s chief executive returned to the US on Monday for talks as pressure builds to seal a partnership deal with Chrysler before the end of the month. Chief executive Sergio Marchionne is going to Detroit and Washington to get the US car maker’s unions and bondholders to agree the deal.
Marchionne will not go to Canada, where the Canadian Auto Workers (CAW) union had invited him to take part in their talks with Chrysler, they said.
The union has proven to be more resistant to the deal’s terms than its US counterparts. Marchionne has threatened to abandon the deal if they keep resisting. He will return to Italy for a board meeting ahead of publication of Fiat’s first-quarter results tomorrow.
Fiat has received a boost on the back of reports in trade publication Automotive News that it could also form an alliance with General Motors operations in Europe and Latin America.
Fiat has a strong presence in South America in particular, while its European operations could work with the Opel brand, for instance. The two firms were previously linked financially at the turn of the century before parting company over an expensive options deal that cost GM millions to buy out its commitments to the Italian brand.
Several models from the two firms share components, such as the the Grande Punto and the Opel Corsa. Fiat declined to comment on the report of a link to GM.
Meanwhile, Ford says it does not expect to need any government assistance to ride out the recessions. Chairman Bill Ford said: “We are hanging in there and we project that we can continue hanging in there. But clearly we’d all benefit from an uptick in the industry.”
He declined to say whether bankruptcy filings by GM or Chrysler would benefit Ford. “We’re in uncharted water at that point,” he said. “The big concern for us is the state of the supply base. We want to make sure that, whatever happens, the supply base stays vital.”
- Additional reporting Reuters/Bloomberg