Cars.com News Briefs: Feb. 17, 2012
Here's what we have our eye on today:
- Republican presidential candidate Rick Santorum echoed rival candidate Mitt Romney's opposition to the federal government's $85 billion auto bailout. With the GOP's Michigan primary just 11 days away, Santorum told the Detroit Economic Club that the private sector would have reacted to restructure GM and Chrysler without government intervention. Bloomberg Businessweek reports that Santorum places the highest blame on President George W. Bush, who kicked off the bailouts with money from 2008's Troubled Asset Relief Program and says he'd do it again. Former Obama auto czar Steve Rattner said last Tuesday the notion of either automaker finding private bankruptcy funding was, at the time, "utterly fantastical."
- Meanwhile, GM's $9.2 billion in global profits, reported yesterday, will have hourly union workers reaping profit-sharing bonuses of up to $7,000. Bloomberg News reports that figure is at an all-time high; last year's United Auto Workers earned on average $4,300 in profit bonuses. Ford and Chrysler also gave bonuses to their hourly workers — about $6,200 promised from Ford, and $1,500 already disbursed from Chrysler — leading analysts to expect economic gains in union-rich states as employees spend some of their checks.
- GM CEO Dan Akerson told analysts yesterday the automaker is looking "in the next couple of months" for ways to restructure its ailing European unit. The unit, which includes GM's Opel division, lost $747 million in 2011. GM hasn't had an annual profit in Europe in more than a decade, Bloomberg News reports. Opel needs to reduce labor costs to break even financially on lower sales, Opel chief Karl-Friedrich Stracke said. The automaker has too many factories, but GM is under contract to avoid shutdowns and layoffs until 2014.
- As Chrysler's turnaround accelerates, the automaker canceled its long-standing application for federal energy loans, which were part of a loan program to foster environmental efforts across multiple industries. The Detroit News reports Chrysler's $8.6 billion application in 2008 shrank to less than $2 billion last year, which was the amount the Energy Department was considering. Now the automaker says it can secure financing with commercial banks for better terms, sources told The Detroit News. Chrysler was one of more than 100 companies that applied for the program, which funds up to $25 billion in loans. Thus far, just $8 billion has been awarded.