Louisiana Plant Builds Last Hummer H3

Hummer
While it’s sure to become a symbol of the gas-guzzler boom, Hummer saw the last H3 roll off the production line of the Shreveport, La., plant this Monday.

The SUV is part of a special order for Avis, the rental car company, and its completion means that roughly 200 of the plant’s 900 employees will lose their jobs in July. If you’ll recall, GM tried and failed to sell the brand to a Chinese heavy machinery company, leading to its decision to wind down the brand.

All remaining Hummer models have gone on sale in a “Last Chance to Buy a Hummer” promotion that includes zero-percent financing for 72 months and $6,000 off H2 and H3 models.

Hummer has certainly earned a — how else to put this — conspicuous place in automotive history with both its detractors and fervent fans. The last H3 simply marks another one of those small moments that makeup a larger sea change in the kinds of vehicles people are driving.

Last Hummer Rolls Off the Assembly Line (WKOW via The Car Connection)

By Stephen Markley | May 26, 2010 | Comments (12)

$836 Million Could Lure Energy Companies to Old GM Sites

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The Obama administration has proposed setting up an $836 million trust fund to lure companies that build energy-efficient technology to abandoned GM plants.

Using no new government money, the trust would be used for environmental cleanup at old GM sites in 14 states. The sites would be cleaned up, demolished or returned to the local communities. States and municipalities would be relieved of a major financial burden and could recruit new companies to the unused plants. The money would ease the concerns of companies worried about environmental liabilities.

Michigan Gov. Jennifer Granholm said the sites could be used not only for tech startups but also major firms, such as General Electric.

Fifty-seven of the 89 sites are in Michigan, including well-known operations at places like Willow Run, Ypsilanti and Buick City in Flint (pictured above). The state would get $161 million of the trust. President Barack Obama announced the plan from the Rust Belt city of Youngstown, Ohio, which has been hard hit by the auto industry’s troubles.

The plan must first be approved by the U.S. Bankruptcy Court, which oversees Motors Liquidation (better known as “Old GM”). The money will come from the $1.2 billion fund the U.S. Treasury allocated for wind-down costs following GM’s 2009 bankruptcy.

Granholm has cautioned, however, that cleaning up some of the sites may take years to complete.

Old GM Plants May Lure Energy Companies (Detroit Free Press)

By Stephen Markley | May 19, 2010 | Comments (2)

GM Sees First Profit in Three Years

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General Motors reported its first-quarter earnings today and revealed a net profit of $865 million. That’s the first time the automaker has been in the black since 2007, and it provides an optimistic outlook for the post-bankruptcy company.
 
While the profit is greatly attributed to lower costs thanks to the bankruptcy-fueled restructuring that took place last year, revenue also increased from $22.4 billion in the first quarter of 2009 – when the company lost $6 billion – to $31.5 billion in 2010.
 
GM is not traded publicly, but the numbers lead many analysts to think the company will stay positive throughout 2010, and that could mean a public stock offering in the near future. That would be when the U.S. taxpayers would cash in on the 61% ownership they have in GM.
 
GM posts $865 Million Profit for First Quarter (Detroit Free Press)

By David Thomas | May 17, 2010 | Comments (5)

GM Looks to Get Back Into Financing

One of GM’s most profitable businesses was its financing arm, GMAC. Its success was why it was one of the assets the company sold to help stave off bankruptcy in 2006. As everyone knows, that wasn’t enough. Now that GM is out of bankruptcy and seeing recent sales success, it's interested in reacquiring GMAC, now called Ally, or starting a new financing company.

Many automakers have their own financing arms and this is nothing out of the ordinary. In fact, the move to re-establish a financing company may be a clear sign that GM is truly returning to stability.

GM eyes return to car loan business (Detroit Free Press)
By David Thomas | May 13, 2010 | Comments (2)

How Did GM Pay Off the Loans Early?

Chevy
Following GM’s announcement today that it has repaid the $5.8 billion in U.S. and Canadian loans months ahead of schedule, you may be wondering how exactly the automaker managed this. The answer is a $16.4 billion escrow account set up by the Obama administration during GM’s bankruptcy. Those funds are in exchange for the GM shares that make up part of the government’s stake in the company.

The Treasury Department had to figure out how much of a cushion the company would need after emerging from bankruptcy. The escrow account was set up when the government bought a 61% stake in the company, but there was a string attached: GM had to get the Treasury Department’s OK before spending the money.

Thus far, it used the fund to pay out $2.7 billion for the Delphi bankruptcy resolution and previous loan repayments. Rules required any money left in the account by June 30 to be used for loan repayment. With the loans fully repaid, restrictions on the escrow fund will be lifted and GM will be allowed add the remaining $5.5 billion to its reserves.

So what’s the bottom line?

Essentially, GM no longer needs emergency government aid to stay afloat. While the taxpayer still has a sizable investment wrapped up in the automaker, GM has returned to decent health for the time being.

Q&A: GM Will Add Up to $5.5B in Cash to Coffers (Detroit Free Press)

By Stephen Markley | April 21, 2010 | Comments (21)

GM to Repay Fed Loans Early

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GM will announce Wednesday that it’s prepared to repay the remaining $5.8 billion in U.S. and Canadian government loans two months ahead of schedule, according to the Detroit News. CEO Ed Whitacre is expected to make the announcement at GM’s Fairfax Assembly plant in Kansas.

The automaker has already repaid $2 billion of the original $6.7 billion in U.S. loans and $400 million of $1.4 billion in loans from Canada, leaving it with $5.8 billion outstanding. According to GM’s agreement with the U.S. Treasury Department, it was to repay the loans by June 30, but GM has moved ahead of schedule. The Obama administration is citing this as progress for the automaker following its bankruptcy.

This by no means ends the government’s stake in the automaker. Taxpayers still have a 61% stake in GM worth about $43 billion. GM CFO Chris Liddell has made rumblings that it’s possible the automaker could launch a public offering sometime this year, but there are no firm plans.

GM Expected to Repay Fed Loans Wednesday (Detroit News)

By Stephen Markley | April 20, 2010 | Comments (13)

Report Expects Government to Recoup Chrysler, GM Investments

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GM and Chrysler will return to stability, allowing the federal government to sell off its equity to private investors, according to a new report from the Government Accountability Office.

The government holds a 60.1% stake in GM and a 9.9% stake in Chrysler, but with GM expected to be profitable by the end of the year and Chrysler looking to break even, the Obama administration is looking for an exit.

The biggest obstacle are the automakers’ pension plans, which rank among the largest private plans in the country with $104 billion in assets — much larger than the Pension Guaranty Benefit Corp., the federal body tasked with taking over failed pensions. The GAO says the pension plans needed a recovery both in the auto industry and the U.S. economy as a whole but that the automakers would need to contribute billions of dollars over the next few years to keep the plans viable.

The report also warns that if either company should stumble and fail to return to profitability in a “reasonable time frame,” the Treasury Department should look at every option, including forcing the companies into liquidation.

To avoid conflicts of interest, the GAO report also said that Treasury must set clear standards for measuring its investment. With $81 billion spent on rescuing the floundering companies, that investment remains substantial, but it now appears the government may recoup most of that money.

U.S. Expects Enough Profit From GM and Chrysler to Recoup Stakes (Detroit Free Press)

By Stephen Markley | April 8, 2010 | Comments (6)

Hummer to Shut Down, Discounting H2, H3

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General Motors announced today that it will begin shutting down the Hummer brand after failing to secure a buyer. Part of the shutdown is a massive discounting on 2009 and 2010 Hummer models still on dealer lots, which comes to about 2,200 vehicles, GM says.

Buyers can get $6,000 in rebates on the 2009 Hummer H2 and H3, $5,000 on the 2009 H3T and $4,000 on 2010 H3T. Zero-percent financing will be offered instead of some of the cash rebates for qualified buyers.

Both the 2009 and 2010 Hummer H3 start at $33,390. The 2009 and 2010 H3T at $30,750 and $30,915, respectively. There weren’t significant changes between the two model years, so finding a 2009 would be worth the extra cash. The 2009 H2 starts at $63,090. We’d expect dealers will offer their own discounts on top of the cash back from GM.

You can find a new Hummer in Cars.com’s inventory by going here and entering your ZIP code.
By David Thomas | April 7, 2010 | Comments (10)

GM to Repay More Than $1 Billion in Loans

GM
GM plans to make yet another round of loan repayments to the U.S. and Canadian governments worth about $1.19 billion, the company said Thursday.

After a similar payment in December, GM has made considerable progress in paying down the $6.7 billion and $1.4 billion in loans from the U.S. and Canada, respectively. CEO Ed Whitacre believes the loans can be repaid in full by June, which would put GM a full five years ahead of schedule.

Of course, that is not all the taxpayers have wrapped up in GM: The automaker must first relaunch as a public company again.

According to CFO Chris Liddell, even this is not so farfetched. Citing an improved economy as a critical factor and depending upon if GM can become profitable this year, Liddell says GM could launch a public offering as soon as late 2010.

GM to Make Another Round of Loan Payments to Taxpayers (Detroit Free Press)

By Stephen Markley | March 26, 2010 | Comments (2)

Hummer Sale to Chinese Company Falls Through

2008HummerH2
GM’s planned sale of the Hummer brand to China’s Sichuan Tengzhong Heavy Industrial Machinery Co. has fallen through. GM says it will wind down all operations for the brand.

GM says it will honor all warranties and provide service and parts through other GM dealers. This is the same process that Saturn and Pontiac went through in the past year since GM’s restructuring.

Hummer sales fell 67% in 2009 compared with 2008 to just 9,046 units. Reports from Bloomberg earlier today pointed to the Chinese government’s desire to portray a green image as its huge population is increasingly buying more cars as a reason it would not approve the sale. 
By David Thomas | February 24, 2010 | Comments (4)

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