Monday, March 30, 2009

BREAKING Report: Obama's press conference concerning the Amercican auto industry, including:

Rejecting GM and Chrysler's viability plan and coming up with new ones before the dead-line, or forcing Chapter 11 Bankruptcy; Removing Rick Wagoner from CEO of GM; Finalize Fiat-Chrysler partnership

President Obama has just finished his press conference on the government's position towards General Motors and Chrysler's terrifying financial situation. The conference was most concerned about the viability plans that both companies presented to the U.S. Department of Treasury last February. Well, it seems the new Obama administration wasn't convinced of the companies future business plans. At the conference, President Obama gave each company the requests needed, and set deadlines.
For GM, President Obama and his administration requested GM to move Rick Wagoner from CEO of GM. Rick Wagoner never had a good history as being CEO. During his time as CEO from 2000, GM saw its market share decline rapidly while the company reported losses of around $82 billion since 2004. Unsurprisingly, Rick Wagoner officially resigned today, to be replaced by Fritz Henderson, GM president and chief operating officer (COO). On Friday I was in Washington for a meeting with Administration officials. In the course of that meeting, they requested that I "step aside" as CEO of GM, and so I have," said Wagoner in a statement. That's not all, Obama's task force also want GM another viability plan within 60 days, though no money was promised yet. So, new COO Henderson has a lot to do, and the new Camaro has to pay off to help its mother company. Because according to the auto task force’s Viability Summary of GM, the Chevrolet Volt will not save the Detroit automaker, and as a package the car won't be as a great investment.

Chrysler also has loads lot work to do as well. The feds has given Chrysler a budget up to $6 billion, in which, they have to finalize their announced Fiat partnership, and add it to the new viability plan that should include more interesting investment plans. All that, within 30 days. That's a month of pressure countdown, but Chrysler has to do it. UPDATE: Chrysler has released a corrected statement that says it's only agreed with Fiat on a "framework of a global alliance," but that no deal with the Italian automaker to partner up has been made yet. So they've basically agreed on what a Chrysler-Fiat merger would look like, but not on whether they're going to do it or not.

If GM and Chrysler don't stick to what is requested within the deadline, the US Treasury will refuse the financial aid for both companies. And since the companies are already drowning in financial loans, they eventually have to go by the Chapter 11 Bankruptcy rule. Which will lead to massive job losses for millions, even billions of dollars vanished, and disposed factories. We all don't want to see that happening.

Everyone is working hard to keep those two companies standing. The President has pledged to work with Congress to find funds to pay for a U.S.-version of the Cash for Clunkers program that has been so successful in Germany. This program will pay back warranties on vehicles sold by General Motors and Chrysler in the hopes that buyers will continue to consider their products. So it's all the matter of trust from the consumer, to buy GM and Chrysler cars in the sake to save the American auto industry.

To get a better understanding of what's happening, The Truth About Cars has compiled all of the government's official documents on today's announcements.
Determination of Viability Study; General Motors Corporation
Determination of Viability Study; Chrysler, LLC
Restructuring Fact Sheet
Federal Warrantee Commitment Program

Hang on in there, we are all with you, Detroit!

[Main Photo by JIM WATSON/AFP/Getty]

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