One premise of the GM bailout, were told, is that if GM doesn’t come up with a workable plan for profitability, we would call the loan and get the money back. This always seemed like a stupid idea, if for no other reason than most of the money will already be spent by the time GM has to present the plan.
Sure enough, it’s been about a month since GM got its first $4 billion, and GM says the money is gone:
The target date for General Motors Corp. to get its second installment of government loans passed last week, but a top company executive says he expects the money to arrive in the next several days.
Fritz Henderson, GM’s president and chief operating officer, said without the second installment of $5.4 billion, the company would run out of cash long before March 31. . .
GM received $4 billion late last year and was to get $5.4 billion Jan. 16 and another $4 billion on Feb. 17, the day it is to submit its plan to show the government how it will become viable.
Henderson told the Automotive News World Congress in Detroit that the money is critically needed to pay its bills.
By March 31, GM will already have blown $9.4 billion, and the most we can do is deny them an additional $4 billion. (And let’s not kid ourselves that we’ll do even that.) Plus, there’s Chrysler on top of that.
The story also has an interesting tidbit on GM’s reorganization:
[Henderson] told the group that GM will have four core brands in the future: Cadillac, Chevrolet, Buick and GMC.
GM is reviewing the Saturn brand with its dealers, is studying Saab and Hummer for sale and will shrink Pontiac to a performance niche brand.
I’m not a car guy, so I had to look up the list of GM brands. If we can assume that brands not listed are going to be terminated (which is not entirely clear from the wording), GM will be ending the brands Daewoo, Holden, Opel, and Vauxhall, not one of which I’ve even heard of. (GM already got rid of Geo in 1997 and Oldsmobile in 2004.) It’s good that they’re getting rid of invisible brands, I suppose, but it’s hardly a major reform.