DETROIT – General Motors Corp. told its dealers Tuesday that it will force 1,000 to 1,200 underperforming locations to close their doors as the automaker tries to thin dealer ranks to make the remaining outlets more profitable.

GM told the dealers about the plan in a video conference, according to a dealer who spoke on condition of anonymity because the video conference was private. It is part of the company’s plan announced Monday to cut more than 2,600 dealers by 2010.

The company expects to lose 500 Hummer and Saturn dealers when those brands close or are sold, and it expects 400 dealers to close voluntarily. Another 500 would be consolidated into other dealerships, according to the dealer.

GM said Monday that it also would eliminate its Pontiac brand, but there are only 27 dealers that sell just Pontiacs, according to the National Automobile Dealers Association. Most Pontiac dealers also sell Buick and GMC vehicles at the same location.

Company spokeswoman Susan Garontakos confirmed the numbers and said GM is in the process of deciding which dealers to keep based on their sales performance, capitalization, potential profitability, size, image and customer satisfaction scores.

After that, she said, the company will go market by market and determine which dealerships are not meeting the terms of their franchise agreements.

“There’s a lot of things that we have to consider, but we’ll have talks with those dealers that show or haven’t demonstrated that they have maintained a good performance,” Garontakos said.

John McEleney, chairman of the NADA, said in a written statement that GM must treat all of its dealers fairly and those that close should be compensated.

“It’s not out of any fault of their own that these dealers are being forced to close their businesses,” McEleney said.

He said many details were unknown about how the dealerships will be closed, but “137,330 dealership employees will lose their jobs, and state and local governments will lose an estimated $1.7 billion in sales tax revenue that would have been used for economic development in communities around the country.”

GM announced Monday it plans to reduce dealerships by 42 percent from 2008 to 2010, cutting them from 6,246 to 3,605.

GM is living on $15.4 billion in government loans and faces a June 1 government deadline to complete restructuring moves, win concessions from its unions and cut its debt. If it fails to meet the deadline, it will go into Chapter 11 bankruptcy protection.

GM has decided to scrap its Pontiac brand and either sell or close Hummer, Saturn and Saab. It will focus on four core brands: Chevrolet, Cadillac, GMC and Buick.

Courtesy of the Associated Press.

DETROIT – General Motors Corp.’s chief financial officer says the company will not need the $2 billion loan installment for March that it requested from the U.S. government in February.

CFO Ray Young said Thursday in an interview with The Associated Press that GM told the Obama administration it won’t need the money so soon because its cost cuts are starting to take hold.

GM borrowed $13.4 billion from the government earlier this year. Last month, it said it would need up to an additional $16.6 billion to keep operating, including $2 billion in March and $2.6 billion in April.

DETROIT – General Motors Corp. has scrapped plans to build a new factory to make engines for the Chevrolet Volt, instead choosing the less-costly option of assembling the engines at an existing plant.

The troubled automaker said Tuesday that it would install machinery for the 1.4-liter, four-cylinder engine in unused space inside the existing Flint South Engine Plant, about 50 miles northwest of Detroit.

The move will save the company about $120 million over building a new factory.

“GM will not invest in new floor space at this time due to current capital expenditure constraints and available floor space at existing facilities,” the automaker said in a statement.

The company said it will invest $250 million in the Flint South plant to make the new engine, which also will go into the Chevrolet Cruze compact. Both the Volt and Cruze are due in showrooms next year.

The plug-in Volt, GM’s effort to take the lead in electric vehicles, will have a lithium-ion battery and electric motor that can take the car 40 miles on a single charge. After that, the small internal-combustion engine will take over and power a generator to extend the car’s range.

GM says the Cruze is expected to get about 40 miles per gallon on the highway.

GM announced in September that it would invest $370 million to build a new 522,000-square-foot engine plant just north of the Flint South plant.

The new factory was expected to create 300 new jobs. It was unclear how many new positions would come from building the engine at Flint South instead.

GM is living off government loans as it tries to weather the worst U.S. auto sales downturn in 26 years. The company has received $13.4 billion in loans and is asking for a total of $30 billion. Without federal money, GM said it would have run out of cash and faced bankruptcy in January.

Chrysler LLC also is living on government loans. It has received $4 billion so far and is seeking a total of $9 billion.

Source: Associted Press

The automotive industry has been the backbone of U.S. manufacturing and a leading
investor in research and development for nearly a century.  It is a significant factor in the

U.S. economy, employing 1 in 10 workers and a major purchaser of U.S.-made steel,
aluminum, iron, glass, plastics and electronics.  It is an industry undergoing massive
change, and one that can be key to both transforming the U.S. economy and creating
high-tech, ―green‖ jobs that support a healthy and growing middle class.  Appendix A
presents key facts about the role of the automotive industry on the U.S. economy.

For most of this decade, General Motors has been pursuing a major transformation of its
business, working to improve the consumer appeal, quality, safety, and fuel efficiency of
its cars and trucks; to achieve cost competitiveness or advantage in labor, manufacturing,
product development, procurement and staff functions; and to address the Company‘s
huge legacy cost burden.

As noted in the December 2 submission, the Company has
made significant progress in all of these areas and, even after rising oil prices and a
slowing economy in mid-2008 cut automotive volumes by more than 20%, GM was
confident in its ability to self-fund its continuing transformation.

In the last six months of 2008, housing price declines accelerated, foreclosures rose,
credit markets froze, job losses skyrocketed, and consumer confidence tumbled.  As the
economic crisis intensified, automotive sales fell to their lowest per-capita levels in half a
century, putting automakers under enormous financial stress.  All automotive
manufacturers have been severely affected, with most reporting significant losses in the
recent quarter.  Under these extraordinary conditions, GM‘s liquidity fell rapidly to levels
below those needed to operate the Company, and GM was compelled to turn to the U.S.
Government for assistance.

Since December 2, economic conditions have continued to deteriorate globally.  This,
combined with public speculation about GM‘s future, has further reduced the Company‘s
volumes, revenues, and cash flows. In addition, the weakening financial markets have
significantly reduced the value of GM‘s large pension fund assets.

The Company has responded aggressively to these worsening economic and industry
circumstances, accelerating, and adding to, the restructuring elements contained in the
Company‘s December 2 Plan (Chart 2 below presents key Plan changes).  The revised
Plan comprehensively addresses GM‘s revenues, costs, and balance sheet for its U.S. and
foreign operations, and is based on conservative assumptions.  It also results in a business
that will contribute materially to the national interest by developing and commercializing
advanced technologies and vehicles that will reduce petroleum dependency and
greenhouse gas emissions, and drive national technological and manufacturing
competitiveness.

CHICAGO – In an effort to get the american automotive crisis settled, many key players are pointing fingers and blame the executives for this epic slump. Democratic Senator Christopher Dodd (Connecticut) mentioned that General Motors CEO Richard Wagoner “has to move on [...] and face the nation”. The comments come after talks for the economic bailout have moved forward but nothing of the $15 billion number has been settled. Senator Dodd also made it a point to state that “GM is in the worst shape”  while adding that one of the essential steps towards rebuilding is Wagoner’s resignation.

Many analysts suggest that Chrysler LLC. and General Motors Corp. are at risk of running out of money within the next two months if nothing is done and that Ford may not be too far behind the rest.

Tuned will keep you posted on any further developments.