GM Loses $4.9B in Q4, $8.6B in '05
General Motors produced another awful financial surprise Thursday by announcing it lost $4.9 billion during the fourth quarter and more than $8.6 billion for all of 2005.
The company says the wide losses were due to the heavy cost of the company's contracts with the United Auto Workers and the need to bail out the bankrupt Delphi Corp.
Richard Wagoner, GM's chairman and chief executive officer, said, "Our results were dramatically and adversely affected by charges for restructuring and matters associated with Delphi Corp.'s Chapter 11 filing," Wagoner said. It "was one of the most difficult years in GM's history," he said.
"In order to improve financial results in 2006 and 2007,
we are moving quickly to implement several important actions that will address
these weaknesses in
However, Wagoner and Fritz Henderson, GM's new chief financial officer, said the pace of the restructuring will depend on talks with the UAW, which must sign off on any plan that includes worker buyouts or early retirement.
The fourth-quarter financial report was worse than most analysts expected and is certain to revive talk about a bankruptcy filing by the giant automaker.
Loses $4.9B in Q4, $8.6B in '05 (1/26/2006)
Staggering numbers underscore gravity of restructuring.
Financial problems at
UAW, DCX Talking Healthcare
The United Auto Workers has granted Ford Motor Co. and General Motors Corp. concessions on the healthcare benefits for union workers, albeit reluctantly. But when it comes to DaimlerChrysler, the signals for a deal on healthcare are altogether more ambiguous.
Both Dieter Zetsche, DaimlerChrysler chief executive, and Tom LaSorda, Chrysler Group CEO, have indicated they are confident the union is prepared to approve healthcare concessions similar to those already delivered to GM and Ford.
However, UAW president Ron Gettelfinger, who likes to say the devil is in the details, is a master at drawing out negotiations, particularly when there is no advantage to the union in a quick settlement. He has noted there are subtle differences in the so-called pattern contracts at DaimlerChrysler, General Motors and Ford. For one thing, going back to the concessions days in the early 1980s, Chrysler always had an escape clause that allowed the company to shift some costs in some plans to employees if the company's overall bill increased too quickly, which it did last year.
Thus, Gettelfinger noted recently that the union had already
adjusted healthcare plans at Chrysler. Gettelfinger also said the concessions,
while painful for the union, were necessary because of
"It was a long year," Gettelfinger said in a speech to the Automotive News World Congress. "It was probably one of the most painful, excruciating decisions that we ever had to deal with as a union."
DCX Talking Healthcare (1/26/2006)
But there's no guarantee on a deal.
Oil Prices Up, Sales Off in '06
Sales of new vehicles in
January don't look very promising, according to a new survey by the Power
Information Network maintained by J.D. Power & Associates of
In addition, gasoline prices are beginning to move upwards again, putting new pressure on motorists and manufacturers who had been counting on relatively stable oil prices to boost consumer confidence and sales of new vehicles, raising the possibility carmakers will be unable to avoid heavy-duty incentives as the year progresses.
The report from the Power Information Network estimated that new-vehicle retail sales were down 11 percent through the first 15 days of January when compared to the same time period a year ago.
GM's retail sales when compared to early January 2005 dropped 28 percent while Ford Motor Co.'s fell 25 percent in the first 15 days of January. DaimlerChrysler sales were down 13 percent when compared to the same period in 2005. Domestic manufacturers generally tend to do better once the fleet sales numbers are added to the mix.
Prices Up, Sales Off in '06 (1/26/2006)
Big domestic declines ring in the new year.
Cadillac Papering Super Bowl XL
Cadillac, one of the General Motors' biggest success stories in recent years, is gunning for its fifth consecutive year of sales increases.
Jim Taylor, Cadillac's general manager, said GM's luxury division is confident it can boost sales again in 2006.
For one thing, Cadillac is counting on the introduction of the new
2007 Cadillac Escalade, which is part of the fleet of new SUVs that GM is
counting on to help arrest the slide in the company's profitability and market
share, he said. The Escalade represents Phase II of the Cadillac renaissance,
To get the buzz around Escalade rolling,
Cadillac is planning to use Super Bowl XL to kick off Escalade sales,
Leo Burnett Detroit recruited experts from the fashion world to help create the 60-second spot, "Chrome Couture," which emphasizes the Escalade's unique appeal as pop-culture icon.
The agency created a fashion show for the commercial, in which the Escalade rolls out as models get their hair and makeup done and dresses tailored at the last minute, while fashionistas, paparazzi and celebrities pack in around the catwalk.
Papering Super Bowl XL (1/26/2006)
New Escalade will be focus of Caddy's NFL celebration.
Ford Shows E85 Escape Hybrid
As Ford promised earlier in the week in its Way Forward
restructuring, it's looking to ethanol power to "green" up its vehicle fleet. On
Wednesday, at the
Hybrid Buyers' Guide by TCC Team (10/17/2005)
What to look for in the new wave of fuel-sippers.
Kerkorian Dips Back into GM Well
Kirk Kerkorian's Tracinda Corp. is at it again. The company is buying up twelve million shares in General Motors, an amount equal to the shares Tracinda sold in December, according to the Associated Press. With the latest moves, Kerkorian's share in the world's largest automaker will rise again to 9.9 percent. Tracinda is said to have sold the stock to take advantage of tax laws and year-end write-offs. GM, which will announce its 2005 and fourth-quarter financial results this morning, will cut 30,000 jobs by 2008 and will shutter twelve assembly and parts facilities.
GM Should Drop Saab, HUMMER by Joseph Szczesny (1/10/2006)
Company has 1000 days of cash left, Kerkorian's wingman says.
DC Cutting Jobs at Home; Chrysler, Benz to Grow Closer
Some European reporters still refer to the German-American automaker as "Daimler-Chrysler." But in a press conference this morning, CEO Dieter Zetsche told reporters and analysts, "Today, you can eliminate that hyphen."
Zetsche says that with the restructuring announced this morning, his management team is taking steps to integrate DaimlerChrysler even further-committing to a "new management model" with streamlined processes to unleash DaimlerChrysler's potential and profitable growth. Consolidation will occur at all levels, from Zetsche on down, as his title of head of the Mercedes Car Group is officially combined with his CEO duties. Along with similar moves with other roles, DaimlerChrysler's board will officially shrink from twelve to nine members.
To cast the management revamp in stone, Zetsche says the DC Board of Management will move its headquarters in May of 2006 to Untertuerkheim from Moehringen, though some support functions will stay in Moehringen. With the move, the company's official headquarters will be in Untertuerkeim, the spiritual home of Mercedes-Benz and Auburn Hills, home of the Chrysler Group. "We want the board to be where the action is," Zetsche said.
In describing the changes he hopes to make on the notorious infighting corporate culture at Mercedes-Benz, Zetsche was blunt. By moving the board into the factory, Zetsche says the new company is all automotive. "We all drive the cars at night and see what kind of progress we are making," he said. "This is the kind of culture we want to have - no bullshit, no politics."
Much of the reductions will involve head count at Mercedes as well as realignments in its truck and bus divisions, which will be split into a truck group, while vans will be put under the Mercedes Car Group aegis. DC hopes to effect a net savings of $1 billion annually from the combination of cuts and merging the back offices of the car and truck groups. However, the cuts will be painful at home, where DaimlerChrysler says it will eliminate 6000 jobs, reducing its management ranks by 30 percent. The personnel cuts will take three years and two billion Euros to complete.
The cuts will mean one thing for Chrysler Group: bringing it "markedly
closer" to its German sister company. For example, research for all DC car
divisions will be merged into Mercedes Car Group. Zetsche hinted that the
lessons of companies like
Era Begins at DC by Joseph Szczesny (1/2/2006)
Cordes, Schrempp, even Hubbert are history as
Zetsche Determined to Finish MergerDieter Zetsche, DaimlerChrysler's chief executive officer, seems bound and determined to finish off the job started by Juergen Schrempp and turn the German-American automaker into one big car company.
His plan to revamp the company's management team calls for concentrating all of the company's far-flung research and development activities under the Mercedes-Benz Car Group. Thus, the Chrysler Group's vestigial advanced research and development unit will now be absorbed in the new Mercedes unit. More significantly, perhaps, the extensive research capability that DaimlerChrysler has maintained outside the car groups also will be absorbed into Mercedes-Benz.
Zetsche said cooperation between the Mercedes Car Group and the Chrysler Group will become markedly closer. However, he stressed that he isn't about to sacrifice Mercedes' hard-won reputation as one of the world's top luxury brands in an effort to reduce costs. "A clear priority within this effort will continue to further strengthen brand identity," he said.
The DaimlerChrysler CEO also said the old idea of platform-sharing is already fading in the industry. The new model is more like Legos, where certain modules or building blocks can be shared, he said. If the block doesn't change the perception of the vehicle, it might be found on both Chrysler and Mercedes vehicles. But if the module means something to the customer then it will be differentiated, Zetsche said. "We want to turn scale into profitability," he said. "You can expect to see more examples of collaboration, especially when we can transfer knowledge between the groups, such as when the Chrysler Group tapped the rear-wheel-drive expertise of Mercedes-Benz in the development of the Chrysler 300C," he said.
Zetsche also stressed the flexible development system should allow DaimlerChrysler to produce more unique vehicles.
In addition, instead of just having departments devoted to certain kinds of research, DaimlerChrysler plans to use "project houses," Zetsche suggested.
"You will also see more examples of clearly defined 'project houses' where engineers from different divisions work together for the benefit of the whole company," he said.
The joint venture in
Ford Continues Way Forward Without
Steve Lyons - FORD
"Way Forward" Arrives by TCC Team (1/23/2006)
The real challenge begins after the cuts are made, analysts say.
Ford Charts The "Way Forward"
Bill Ford 2006
Despite deep cuts affecting virtually all Ford "stakeholders," Monday's announcement left a number of questions unanswered, including the fate of several Ford assembly plants, as well as specific plans to support the turnaround with much-needed new product. Ford officials promise to fill in some of those gaps in the weeks to come, with company sources providing some of the details for TheCarConnection.com.
"We all have to change and we all have to sacrifice," said Ford Chairman and
CEO William Clay Ford Jr., as he outlined the situation facing the company
founded by his great-grandfather, Henry Ford I, 102 years ago. But he left the
details of the so-called "Way Forward" plan to Mark Fields, the young President
His words were driven home by the first of three Monday morning briefings for reporters and industry analysts. Chief Financial Officer Don Leclair painted a picture of a company improving its fortunes in much of the world - even as its home market is in freefall.
Charts The "Way Forward" by TCC Team (1/23/2006)
Deep cuts - but are they enough this time?
More to Come from Ford
It took a team of 60 Ford insiders, working virtually without break for 100 days, to pull together the Way Forward turnaround plan. Yet several sources familiar with the project tell TheCarConnection.com that the project is far from complete.
Of seven assembly plants expected to close, only three were specifically
named on Monday. Two others will follow shortly, TheCarConnection has learned,
including the Ranger plant in
Work on the various speeches given on Monday continued almost to the moment before senior Ford managers, led by CEO Bill Ford, took to the stage. That reflected, in part, an ongoing debate over just how much information to reveal to the world. In the end, a number of key details were omitted, in part for the sake of time, in part to maintain certain proprietary decisions.
But "a lot will be coming out over the coming weeks and months," confided one high-level source, immediately after the announcement was completed. Others confirmed that comment.
to Come from Ford by TCC Team (1/23/2006)
Automaker will be making lots more news in the coming months.
Ford Earns $2B In 2005
Ford Motor Co. did better than expected financially during the fourth quarter, eking out a small profit even though its core automotive business was under siege and its credit rating under extreme pressure.
William Clay Ford
Jr., chairman and chief executive officer, said Ford Motor was profitable for
the third consecutive year in 2005 and its automotive business was profitable
everywhere but in the
John Murphy, the auto analyst at Merrill Lynch, said in a note to clients that Ford's fourth quarter was better than expected. "Surprisingly, the main driver of the upside of the quarter was Ford's automotive operations," he said. In addition, the company's liquidity position looks relatively secure since the company is now sitting on $25.1 billion in cash, Murphy said.
Earns $2B In 2005 (1/23/2006)
Ford Credit drives third profitable year in a row.
Special Report: Ford's Way Forward (1/23/2006)
Power: Sales Slump Continues in January
J.D. Power and Associates says that January auto sales are still in their
winter funk. Power reports that, by its estimates, total vehicle sales are
off eleven percent halfway through the month of January. Leading the charge
lower are General Motors and Ford, where Power estimates that sales are off by
28 and 25 percent, respectively, with DaimlerChrysler following at a 13-percent
sales drop. On the up side, Hyundai sales have risen 19 percent in January and
Report: Jan. 23, 2006 by TCC Team (1/22/2006)
NHTSA has new nominee, Chrysler Group says Jan. sales soft.