Chrysler

Chrysler Bail Out Loss - $1.3 Billion

The Treasury has just exited, stage left, from the Chrysler Bail Out. The probable loss? $1.3 billion dollars or 10% of the bail out. Even more ridiculous, if Treasury had just held onto the stock exchanges until 2017, they would have made a profit. Oh well, what's few billion here and there.

The government has received $560 million from Italian auto company Fiat in exchange for the 6 percent stake it held in the company. Treasury expects the U.S. will ultimately lose $1.3 billion from the effort to save Chrysler.

Fiat, which is implementing plans to merge with Chrysler, in May agreed to buy the government's stake in the company. Thursday's transaction marks the end of Treasury's financial backing for the auto manufacturer, which was on the verge of collapse at the height of the financial crisis.

While the government ultimately lost money in its efforts to save Chrysler, Treasury touted the end of the bailout as happening earlier than expected and said it saved American jobs.

“With today's closing, the US government has exited its investment in Chrysler at least six years earlier than expected,” said the Treasury's assistant secretary for financial stability, Tim Massad. “This is a major accomplishment and further evidence of the success of the Administration’s actions to assist the US auto industry, which helped save a million jobs during the worst economic crisis since the Great Depression.”

"That Fund is not a Slush Fund"

Looks like some Indiana pension funds are headed to the Supreme court after Appeals Court Refuses to Block Chrysler’s Sale of Chrysler to Fiat.

These pension funds are losing their rear ends. They bought $42.5 million of Chrysler debt in July 2008, at 43¢ on the dollar and the Government is giving out 29¢ on the dollar, a or 33% loss and roughly $28.7 million.

What is most interesting in this New York Times article is this in referring to the billions in government money Chrysler has already received, coming from TARP and other bail out funds:

That program “is not a gigantic slush fund,” Glenn Kurtz, a lawyer for the funds, said Friday.

A lawyer for the government responded that the Treasury Department was given wide latitude by Congress to decide how to spend the bailout money.

I guess the Appeals court decided the TARP money is a slush fund since they ruled against the Pension Plaintiffs.

Here Comes the Firesale from those Closed Chrysler Dealerships

Since Chrysler put those chopped dealerships between a rock and a hard place by refusing to buy back their inventory, we now have firesales of autos trying to get some of their money back.

At Engel's dealership, a 2009 Dodge Ram Truck with a retail price of $45,428 is selling for $28,392 -- after rebates, incentives and cash back from the dealer.

Emily and Josh Patterson left a dealership outside Chicago with a new Dodge Caravan they got for nearly $13,000 off the $40,000 sticker price.

"We came in just to look but when we found the deal we really went from there," Emily Patterson said.

Yet the buyers' gain is the dealers' pain.

Looks like Chrysler is headed for a Preplanned Reorganization Bankruptcy instead of Liquidation

The New York Times is reporting Chrysler has made a deal with the UAW and is headed to a Chapter 11, pre-arranged bankruptcy that is not a liquidation.

The deal includes Fiat, the Italian automaker with which Chrysler was ordered by the government to form an alliance before Thursday.

Neither the United Automobile Workers union nor the company released details of the tentative agreement, which would modify the union’s 2007 contract and reduce the amount of money Chrysler must pay into a new health fund for retirees.

Some of the terms, which are not officially released are:

Chrysler, Fiat Deal Once Again Squeezing the Workers

Anyone else notice that most of these negotiations from the auto industry involve squeezing the workers? Nothing about modifying trade agreements or bad cars or their supply chain.....

Nope, the latest demands from Fiat involve wages and retiree health care benefits:

People close to the talks, however, said the union’s health care trust would most likely end up owning more than 20 percent of Chrysler.

That could make the trust, for a time, the single-largest stakeholder in the automaker.

The proposed alliance with Fiat would give the Italian firm an initial 20 percent stake in Chrysler, with an opportunity to increase its ownership to 35 percent.

The union is also in talks with General Motors about a similar arrangement to allow G.M. to contribute stock to finance half of a $20 billion health care trust for its retirees.

No Bail Out for GM & Chrysler - Bail Out Denied - Reporting Possible Death Sentence in 60 Days

I had to do a double take when I read this, amazed considering there are about 160,000 jobs directly with GM alone in the United States, but now multiple major press sites are reporting Obama Denies Bail Out for GM & Chrysler

The White House says neither GM nor Chrysler submitted acceptable plans to receive more bailout money, setting the stage for a crisis in Detroit and putting in motion what could be the final two months of two American auto giants.

The Obama administration, however, has decided not to require the automakers to immediately repay government loan money they previously received, since that would force both companies into Chapter 11 bankruptcy.

Obama Administration Assisting in Squeezing GM, Chrysler UAW workers

Anybody else sick of reading between the lines to get the real story?

President Barack Obama's auto industry task force was expected to offer additional aid to General Motors Corp. and Chrysler LLC while setting firm deadlines for the companies to get concessions from their stakeholders.

Buried deep in the article detail paragraphs is this:

Both companies are trying to reduce their debt by two-thirds and convince the United Auto Workers union to accept shares of stock in exchange for half of the payments into a union-run trust fund for retiree health care costs. The loan agreement also called for executive pay cuts and labor costs that are competitive with Japanese automakers with U.S. operations.

In other words, going to almost Walmart wages for advanced manufacturing jobs.

GM, Chrysler Say Bankruptcy Close without More Government Aid

Both GM and Chrysler say bankruptcy imminent without more aid.

U.S. auto sales continued their free fall into February, as big rebates and low-interest financing failed to lure people back into car dealerships and showrooms.

Today General Motors reported that its sales slid 53 percent in February compared with the same month a year ago, and Chrysler sales dropped 44 percent.

Ford's sales tumbled 48 percent, despite distinguishing itself from cross-town rivals in recent months by keeping the company afloat without federal aid.

"The economic and competitive environment remains challenging," said Ken Czubay, Ford vice president for sales and marketing, in a statement. "Ironically, these times provide the best opportunity to distance Ford from the competition."

GM, Chrysler May Be Put Into Bankruptcy

GM, Chrysler May Be Put Into Bankruptcy:

General Motors Corp. and Chrysler LLC may have to be forced into bankruptcy by the U.S. government to assure repayment of $17.4 billion in federal bailout loans, a course of action the automakers claim would destroy them.

U.S. taxpayers currently take a backseat to prior creditors, including Citigroup Inc., JPMorgan Chase & Co. and Goldman Sachs Group Inc., according to loan agreements posted on the U.S. Treasury’s Web site. The government has hired a law firm to help establish its place at the front of the line for repayment, two people involved in the work said last week.

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