EX GM Exec Lutz: Feds Told GM To Drop Pontiac Or No Bailout

[trademaster]

Originally Posted by Russo

you do realize that when GM took the taxpayers money, they kept all the same management that caused them to go bankrupt?

Wagoner resigned as CEO at the request of the White House and a new Board of Directors was established including five entirely new, previously unaffiliated, board members selected by the federal governments of the United States and Canada. So no, you are completely wrong.

[HeavyIOM]

I think that the direction Pontiac was going in the end would have revitalized the brand. Especially if it was going the way Lutz described. a G6 based on the ATS would have been the brand saver i believe. That car would have been awesome. an ATS for the finacially challenged. Can you imagine how awesome the Pontiac brand would be, being built with the quality GM is building today?

[FenwickHockey65]

No, because under the original plan, around now would've been the time when Pontiac was shut down.

The government basically just helped accelerate what was already in motion.

[shaffe]

Pontiac was dead already. Like Fen said, the govt just helped put it out of its misery. Once the badge engineering took full effect, pretty much everything besides Chevy and Cadillac IMO was slowly being put out to pasture. The way they have each brand going now, looks like they have the ship heading in the right direction.

[matt55]

Originally Posted by trademaster

I know responsibility is crazy to most .

[trademaster]

Originally Posted by matt55

I know responsibility is crazy to most .

If by responsibility you mean recklessly allowing an entire industry to crumble, then sure. GM was in desperate need of an enormous cash injection. Ford mortgaged almost every domestic asset and sold holdings in Volvo and Ford Credit in 2006 to raise $18 billion to fund, "the Way Forward" restructuring plan. By the time GM hit rock bottom it was too late and the lenders were simply not there, thus the lender of last resort had to step in.

[Number 3]

Originally Posted by Russo

you mean like Chrysler selling out to Fiat? and now they make better cars because of it...



you do realize that when GM took the taxpayers money, they kept all the same management that caused them to go bankrupt?

Yes but not for very long. Senior leadership all pretty moved on. Reuse is pretty much the only one left.

[matt55]

Yes I love hell fire and brimstone :-/.
I do not accept that the only way to save the universe was to throw $$$ at gm .
Companies can survive bankruptcy and come back .

[GroundPilot]

Originally Posted by matt55

Yes I love hell fire and brimstone :-/.
I do not accept that the only way to save the universe was to throw $$$ at gm .
Companies can survive bankruptcy and come back .

Agreed. It seems we are unwilling anymore to allow pain to be felt by anyone, at anytime.

[trademaster]

Originally Posted by matt55

Yes I love hell fire and brimstone :-/.
I do not accept that the only way to save the universe was to throw $$$ at gm .
Companies can survive bankruptcy and come back .

GM did survive Chapter 11 bankruptcy, the bankruptcy sale to NGMCO endorsed and financed by the governments of the United States and Canada. GM required a cash injection to maintain continuing operations. Without financing for the bankruptcy process the company would have had to liquidate assets on an insane scale into a market with extremely limited demand. Nobody in the private sector was in a position to finance the restructuring of GM at the time. Remember the condition of the major financial services firms at this point in time -- disrepair.

The bailout was not about saving GM for the sake of the executives. GM was propped up, along with many of the biggest financial services and industrial/manufacturing firms, to prevent a systemic shock => sharp downward shift in aggregate demand => drop in output, that would have plunged the economy into depression. Ford was even pushing for the rescue of their competitors because they knew if financing for bankruptcy wasn't secured the shock to the supply chain would drive them out of business as well. The Fed chose the lesser of two evils and it worked.

[DGthe3]

Originally Posted by trademaster

GM did survive Chapter 11 bankruptcy, the bankruptcy sale to NGMCO endorsed and financed by the governments of the United States and Canada. GM required a cash injection to maintain continuing operations. Without financing for the bankruptcy process the company would have had to liquidate assets on an insane scale into a market with extremely limited demand. Nobody in the private sector was in a position to finance the restructuring of GM at the time. Remember the condition of the major financial services firms at this point in time -- disrepair.

The bailout was not about saving GM for the sake of the executives. GM was propped up, along with many of the biggest financial services and industrial/manufacturing firms, to prevent a systemic shock => sharp downward shift in aggregate demand => drop in output, that would have plunged the economy into depression. Ford was even pushing for the rescue of their competitors because they knew if financing for bankruptcy wasn't secured the shock to the supply chain would drive them out of business as well. The Fed chose the lesser of two evils and it worked.

Not just Ford but also the Japanesse automakers and possibly some of the larger European manufactures. The key problem with letting GM go 'poof' (which is pretty much what would have happened without federal bailout money, since the auto industry took as big a hit as the financial industry did nobody on wallstreet was willing to hand over tens of billions of dollars to an auto company) is that there were a bunch of suppliers on the brink as well. They had all experienced a nearly 50% drop in demand within a matter of months. If GM had to close down, they lose another another big chunk of their revenue. When that happens, a number of them go bankrupt themselves. Since automakers share suppliers for everything, and since you can't build a car with missing pieces, having a bunch of suppliers go out at once would cause other automakers to stop their lines. Which in turn puts more pressure on the already fragile supply system. And the downward cycle continues.


People can deny the 'doomsday' scenario all they like, but I haven't heard of any supply chain management expert who understands & is familiar with the auto industry say that it wouldn't happen with GM. Sure, the occasional 'in house' expert voiced his or her opinion for their native 24hr news channel. But people actually working within the industry, that knows all its ins & outs? The farthest I've heard any of them go is a 'maybe' on losing Chrysler -maybe the industry can handle it, maybe it can't. But GM? The main differences in opinion were on how bad it would be.

[trademaster]

If all the stars aligned we may not have dipped into depression by letting GM fail. It is possible, but in my opinion you don't bet the house on a pair of twos. The bailout was a short-term solution to a long-term problem, but that's better than no solution at all.

[derklug]

My biggest concern with the bailout was not if it was needed(it was) but who benefitted the most. Secured creditors took a bath to allow unsecured creditors(unions, retirees) to stay whole. It redefined Secured.

[MikeSVX]

Nothing new there, except the info about the future RWD only line up and the future G6. It was well know that the bail out agreement forced the dropping of Pontiac and Saturn. The only real disappointment to me is the loss of the Solstic/Sky cars. I'm not a die hard pontiac guy and most of their line up had Chevy sister cars (the G8 is basically coming back as the SS). But those small 2 seat turbo powered cars were screamers and they didn't have any sister cars in the Chevy ranks to carry the torch when they closed.

Although I would have loved to see what Pontiac would have done to the Camaro body themselves. We've seen what the aftermarket did, but what would they have really done?