Whether or not General Motors files for bankruptcy protection, the carmaker has made clear that its future plans do not include two brands — Saturn and Hummer — that once seemed to hold immense promise for the company.

GM has said it will decide this year whether to sell or discontinue both brands as part of the stringent cost-cutting measures aimed at trying to restore the ailing company’s financial stability. The overall effort also has created an uncertain future for two other GM divisions, Saab and Opel.

Even with such efforts, however, many believe the company will be forced to file for bankruptcy protection, perhaps as soon as Monday.

GM spokesman John M. McDonald said this week the automaker has identified parties interested in purchasing Saturn and Hummer, but he would not provide specifics on who might be interested or when any deals might be reached.

“Obviously our interest is to have these brands find a home outside of GM and to continue as a business that can grow and flourish,” McDonald said. “At the same time, I don’t think there’s any illusion: We need to restructure GM, and as we restructure GM there’s no room for those brands.”

The troubles facing the Saturn and Hummer brands are in many ways indicative of the underlying problems that have pushed GM to this point.

Different kind of car
When GM announced plans to launch the Saturn line in 1983, it promised to be different from typical U.S. brands in every way, from its nimble assembly line operation to its no-hassle showroom floor. A major focus was on customer service, including a pledge that buyers would not have to haggle on price.

The company’s early efforts paid off.

“They came out with one vehicle — average vehicle, average price, average quality,” but still found success against their Japanese competitors practically overnight, said Robert M. Wiseman, a professor at Michigan State University’s Eli Broad College of Business.

Still, after a strong start, things went downhill for Saturn, Wiseman said. He faults GM for not investing enough in Saturn’s next generation of vehicles, leaving the company without a strong enough product line to bring its initial customers back again.

As time went on, the Saturn brand also became more enmeshed in GM’s general operations, borrowing design elements from sibling brands and gradually mixing production facilities, experts say. The result has been cars that are too similar to other GM nameplates and do little to excite the customer, some industry analysts say.

“They lost their way a long time ago,” said George Magliano, IHS Global Insight’s director of automotive industry research for North America.

Still, Magliano said that more recently Saturn has seemed to find its footing again with promising new models such as the Aura and the Astra. But the improvements may have come too late.

Source(pictures): CARBODYDESIGN, ALIBABA

General Motors’ fourth quarter earnings report is simply breathtaking. Not in a 1960 Corvette kind of way. Think 1961 Corvair.

GM reports losing $9.6 billion at the end of last year. The company lost $30.9 billion for all of 2008. Throw in all of GM’s charges and you are looking at a loss of nearly $85 million a day. It’s a loss of $3,700 for every vehicle GM sold around the world last year. That’s not red ink. That’s the Red Sea.

It was no accident that three hours after GM reported its earnings CEO Rick Wagoner and the rest of GM’s top management went to the Treasury Department for a meeting with President Obama’s Auto Task Force.

“Today’s meeting with the presidential task force on autos was just the beginning of the hard work ahead for GM and the president’s team,” GM said in a statement shortly after the daylong sit-down.

Wagoner has already asked for $16 billion more in government loans to help GM survive what has become the worst crisis in company history.

“They probably need twice that”, says John Wolkonowicz of IHS Global Insight. “But if you compare that to what a government financed structured bankruptcy would cost – about $100 billion for GM – it’s still cheaper than bankruptcy.”

It’s not unreasonable to think that sound’s like a devil’s bargain. But to be fair, GM was gaining some momentum early last year. Granted, the company made bad decisions for years and depended far too long on highly profitable and gas-guzzling SUVs. However, the company was preparing to roll out its strongest product line-up in years. What nobody could predict at GM’s Renaissance Center headquarters was the Dark Ages was just around the bend. Within six months, gas prices skyrocketed to $4.00 a gallon, the credit markets had a nervous breakdown and unemployment shot up 2 percent. Unfortunately for GM, the airbags did not deploy.

Can General Motors be a viable business while hemorrhaging billions every week? It’s the central question in the Detroit drama. Some analysts believe GM can pull a U-turn if it continues to get government help and at meets least three conditions:

• First - GM has to make cars people want to buy.

• Second - GM needs relief from its labor agreements.

• Third - The economy must begin to improve quickly.

GM has already made great improvements in vehicle quality and dependability. Most of its vehicles are just as good as Japanese makes. In the upcoming April auto issue, ConsumerReports gives a number of GM cars and SUVs high marks – including the Cadillac STS, the Buick Enclave and the Chevy Malibu. The electric plug-in Chevy Volt sparks the imagination and the new Chevy Camaro pumps the adrenaline. Another year or two of vehicles like them and GM could gain some traction with Generation X and Y.

GM and the UAW are already deep in negotiations to amend the union’s labor contract. The healthcare entitlements in the contract for GM retirees are simply burying the company. It is horrible that UAW members who have dedicated their lives to GM are now being asked to give back valuable benefits. But the reality is the benefits package would be among the first things torn to shreds by a bankruptcy judge. The UAW leadership knows it. The trick will be convincing the membership.

The third condition that would make GM viable is something beyond their control. Nobody knows how long it will take for the recession to end. The auto industry is on pace to sell 10 million cars and trucks in 2009. Any annual sales rate below 12 million units cannot sustain General Motors, Ford and Chrysler. The most optimistic annual sales estimates the 12 million unit rate is achievable no earlier than 2010.

“So GM needs a bridge over this water to get them to 2010, when the stimulus package kicks in,” says Wolkonowicz. “These auto companies are salvageable. Getting them through this horrible year will prove to be the right decision, but they will need an indeterminate amount of money over and indeterminate amount of time.”

SOURCE: CBS NEWS

UAW negotiators from factories across America will begin arriving in Detroit on Wednesday to begin preparing for negotiations with Detroit’s automakers, which are under pressure from Congress to bring their labor costs in line with those of foreign automakers in return for federal aid.
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The preparations among the UAW leadership from GM, Ford and Chrysler facilities nationwide are expected to last at least three days, according to one negotiator who did not want his identity revealed. The UAW just ratified its last four-year national labor contract in 2007.

Negotiations with GM are expected to begin Monday, and everything is expected to be on the table, according to a person familiar with the union’s planning.

Despite that, the UAW on today stopped short of saying it is re-opening contract agreements reached with the Detroit Three a little over a year ago.

“We’ll sit down and have discussions along the lines of things we could do in the contracts and have that ratified without opening the contracts,” Gettelfinger said in a statement provided to the Free Press.

In December, the Bush administration agreed to provide $17.4 billion in federal loans from the Troubled Asset Relief Program to GM and Chrysler to prevent the two automakers from potential bankruptcy.

Ford Motor Co. has not asked for federal loans, but said it might do so if the economy deteriorates further. Ford is expected to seek any concessions from the union that GM and Chrysler receive as part of their federal aid package.

SOURCE: FREEP.COM