GM may not need additional federal loans

Jamie LaReau and
and David Barkholz
Automotive News
January 6, 2009 - 5:16 pm ET


UAW President Ron Gettelfinger said today that General Motors and Chrysler LLC may not need additional federal loans beyond the $17.4 billion already approved by the White House.

"If we can get by without more money, that's what we want to do," Gettelfinger told Automotive News in an exclusive interview at Solidarity House.




He said how well the money holds out will depend on sales volume this year. He said he is hopeful that sales will not dip more than 1 million units below 2008's depressed 13.1 million.

The $13.4 billion earmarked for GM may be sufficient, said a source close to the company.

When asked directly if GM plans to ask for money beyond the $13.4 billion, the source answered, "no."

"We've got enough" money from the loan, the source said, "in terms of what our downside scenario is.

"The downside was 10.5 million, which is where most people are. What happens if that downside gets worse? That's anybody's guess."

Chrysler and GM have received $4 billion each to date. GM is slated to get another $5.4 billion on Jan. 16. GM would get another $4 billion on Feb. 17 if Congress authorizes additional federal loans under the $700 billion banking bailout legislation passed this fall.

In December, GM requested $18 billion in federal loans saying that was what it needed to make it to 2010. That number factored in its 49 percent stake in its struggling financial unit, GMAC Financial.

But GMAC was able to gain bank holding company status and secure $6 billion of its own federal funding. The Treasury gave GMAC $5 billion in exchange for preferred stock in the financing company, and lent GM another $1 billion to invest in GMAC.

"So in actuality," said the source familiar with GM's finances, the amount the government delivered "was substantially higher than the $18 billion GM asked for."

 

Why is the UAW commenting on this and not GM?

 

I just wonder if part of GM's plan and reason why the source didn't think they needed more than what was already allotted is because they are counting Chryslers cash as well per merger. Not sure how well that would go over in Congress.

No doubt the new GMAC news is very good for GM and the dealers and relieves a lot of financial burden.


But... I think there is a difference between having enough cash on hand to keep the lights on and survive until a hopeful end to the recession. I think it's another thing to actually get the money needed to fix the problems and turn around the company so that this won't happen again. It's more than just survival it's using the money to invest in the company and keep the pipeline of new products on schedule and not loose ground to the competition. If GM can do that and structure its own downsizing both on dealer and brand fronts to be a leaner and meaner company able to earn profits in an 12-13 million vehicle market on 20% market share all while fulfilling its VEBA and retiree benefits still on the books then kudos.

 

i've noticed that the UAW as of recently has a "HEY LOOK AT ME" complex where they need to make noise and get noticed

 

My thoughts exactly. Where does Gettelfinger get off speaking for GM and Chrysler?

 

That's the first thing I thought as well.

 

So they can position GM as being in a position of financial "strength" and as such, the union shouldn't have to do any more givebacks.

 

I really don't like Gettelfinger. If it were up to me, he'd be out. I therefore don't put much stock in things he says.

 

Speaking out of turn like that might get him in trouble with GM and Chrysler. Too bad either can't do anything about it, as the question would come up "was he wrong?" which would question their finances and whether they were financially secure or not... which would hurt sales.

Its like a duck on a pond.

 

Whether he's wrong or not, it's a "good thing" that word gets out that GM is ok and doesn't need more money. That should dispell the GM is going under publicity, raise consumer confidence, and increase sales. Look at december sales vs. oct and nov when the media was blasting the public about GM going under.

 

He's talking just to talk. It says they "may" not need additional loans. Yeah, it's possible. No one knows yet though.

There is a really slow 09 they have to get through. The Big three are not out of the woods and speaking to that effect is careless.

Plus, the CFO saying this makes me feel better than this UAW stooge.

 

Help me out, I havn't heard this one before