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bailout automotive, originally uploaded by ddonar

Yesterday was the big day for the Big Two (GM and Chrysler). The day they had to both head back up to the big man, with hat in hand, and tell them all about what they have been doing with their borrowed billions of dollars. Here’s what went down:

Well, first of all is important to note that everything that was said during this meeting was taken down to be reviewed by the end of March and then finally decided by the government as to whether or not they are following the guidelines provided by the December 2008 loan agreement. If not, they will be asked to repay the previous loan, which is quite frankly just another word for bankruptcy with the shape these two are in.

FORD
Ford is still holding strong without loan, but most experts say that it is only a matter of time before they are standing next to their brethren in the bread line!

GM
GM shared their plans that they would be eliminating their failing brands of Saab, Hummer, and Saturn. Instead they would like to become a niche automotive manufacturer creating a small number of high performance oriented vehicles under a combined Buick/Pontiac/GMC dealership badge. In addition they will be letting 47,000 of their employees go, and negotiations will commence over the next few months to pay their remaining workers less wages.

Outlined in this new plan, GM has also asked for an additional $17 billion to keep them afloat during these desperate economic times. They pledged that they should be able to begin paying back on any new loans by 2012, having their debt wiped completely clean by the end of 2017. Okay, looks like they are making an effort here.

Chrysler
Chrysler has also asked for additional funding, however only to the tune of about $5 billion above the already $4 billion they accepted back in December. Chrysler was a bit more smug yesterday, claiming that with the additional funding they should be back up on their feet as soon as 2010 and rolling in the money as usual. Chrysler did not have quite the detailed plan of changes as GM, stating that they were planning to lay off workers and put an end to the production of a few failing models, but nothing was very concrete as far as exactly what models, when, how many workers, and how soon this was all going to take place.

In general, Chrysler’s proposal had very limited changes as compared to GM. Their tactic yesterday was more so to attempt to convince the Federal Government that continuing to aid them was the only way to keep taxpayers from footing the huge bill of a Chrysler fallout (a.k.a bankruptcy). Not quite the negotiation tactic reviewers were looking for I doubt.

Conclusion
Hmm, so while GM is obviously in the most trouble and the ones asking for the most aid, they seem to be doing the most in their power to follow their prescribed directions to down-size and rebuild a winning fleet of vehicles. Chrysler on the other hand is offering no real promises other than costing the tax payers a fortune should the government cease with their bailout.

Which one should we keep?