Bankruptcy Is Now ‘More Probable,’ New G.M. Chief Says
Nick Bunkley
DETROIT — The new chief executive of General Motors, Frederick A. Henderson, said Tuesday that bankruptcy was “more probable” than ever for the automaker but that he still hoped to successfully restructure the company out of court.
General Motors interim Chief Executive Frederick A. Henderson during a news conference at G.M. headquarters in Detroit on Tuesday.
“We will get the job done,” Mr. Henderson, who is known as Fritz, said in his first news conference since succeeding Rick Wagoner, who resigned at the request of the Obama administration over the weekend.
“We will either do it out of court or we will do it in court,” Mr. Henderson said, “but we will get the job done in terms of recreating and reinventing General Motors as a competitive enterprise, one that wins in the marketplace.”
The administration on Monday rejected the turnaround plans submitted by G.M. and Chrysler, which have borrowed $17.4 billion since December to help them avoid bankruptcy. G.M. now has 60 more days to develop a new plan, and Chrysler was given 30 days to form an alliance with the Italian automaker Fiat.
If either automaker fails to meet the new deadlines, it could be forced into filing for bankruptcy protection, an outcome each has said that they hope to avoid. Mr. Henderson said he thought G.M. could accomplish what it needed to, including concessionary deals with the United Automobile Workers and bondholders who hold about $28 billion of its debt, within the government’s timeframe.
“If it’s going to get done out of court, we can get done in 60 days,” he said. “More time isn’t going to help the process.”
Mr. Henderson said G.M. received a “clear message” from the administration’s task force, which had been reviewing the two companies’ restructuring plans since February.
“Their view is we need to do more and we need to do it faster,” he said. “We understand exactly what that means.”
Mr. Henderson began his remarks by announcing a program that will cover monthly payments for vehicle buyers who lose their jobs. Across town, the Ford Motor Company introduced a similar program hours earlier. The companies are trying to counter the economic uncertainty that has kept countless shoppers out of car dealerships in recent months.
G.M.’s program also includes a provision that eliminates any negative equity that exists when buyers sell or trade in their vehicle at least three years later. The program, called “G.M. Total Confidence,” allows people who lose their jobs to miss up to nine payments of as much as $500 a month without penalty, within two years of their purchase.
“We think it has a very high perceived value,” said Mark LaNeve, G.M.’s vice president for North American sales and marketing.
Meanwhile, the “Ford Advantage Plan” covers monthly payments of as much as $700 for up to one year. “Consumers remain anxious about the economy and their own outlook for the future. We at Ford want to do our part to rebuild faith in the marketplace,” said Ken Czubay, vice president for sales and marketing.
Both programs are similar to one that the Korean automaker Hyundai began in January, with considerable success. Hyundai also allows buyers who lose their income within one year to return their vehicle without a penalty to their credit rating.
Analysts and dealers say consumers’ lack of confidence in the economy and their financial future is a major reason that industry sales fell more than 39 percent in January and February. Sales in that period were down 51 percent at G.M. and 45 percent at Ford.
www.nytimes.com/2009/04/01/business/01auto.html