After months of speculation about how, when, and if General Motors would enter into US Chapter 11, news today sees confirmation that the once largest manufacturer of cars in the world has buckled under the intense pressure of massive debts and sort protection by filing for voluntary chapter 11.
Following protracted talks between GM, the US Treasury and Canadian governments, the “new GM” is expected to launch in 60-90 days as a separate and independent company, with a significantly lower debt burden, a stronger balance sheet and built from only GM’s best brands and operations. GM Europe is not part of this announcement and talks continue with Magna over the sale, for more information on this story, click the link.
“Today marks a defining moment in the reinvention of GM as a leaner, more customer-focused, and more cost-competitive company that, above all, can quickly generate winning bottom line results,” said Fritz Henderson, GM president and CEO. “The economic crisis has caused enormous disruption in the auto industry, but with it has come the opportunity for us to reinvent our business. We are going to do it once and do it right. The court-supervised process we are pursuing provides us with powerful tools to accelerate and complete our reinvention, as well as strong safeguards for our customers and our business. We are focused on the job at hand, for the benefit of our customers, employees, dealers, suppliers, retirees, taxpayers, investors and other stakeholders.
“We recognize the sacrifices that so many have been asked to make as we have worked to reinvent GM and the automobile,” said Henderson. “GM deeply appreciates the support and the demonstration of confidence in our future by President Obama, the Presidential Task Force on Autos, the Canadian and Ontario governments, American and Canadian taxpayers, the unsecured bondholders who are supporting the proposed sale transaction, the UAW and CAW and their leadership, and the men and women of GM, including our retirees. You have enabled us to carry out this vital transformation for the good of GM, our customers and the economy, and we are working to validate your trust each day.
“From day one, the New GM will be well-positioned to capitalize on the award-winning vehicles we have developed and launched during the past few years, and on our investments in exciting new technologies like the Chevy Volt, so that we can build and return value to our customers and to the millions who will have a stake in our success. The New GM will play a critical role in the future of the automobile, and assure that the U.S. has a strong stake in this rapidly changing global manufacturing industry,” Henderson said.
Under the terms of the deal, the New GM will focus on four core brands in the US – Chevrolet, Cadillac, Buick, and GMC; while the North American workforce will be reduced from 35,100 to 27,200.
“Our products are our future, and our lineup of new cars and crossovers are a great foundation for success,” said Henderson. “The New GM is here to stay, and our brands position us to compete well in profitable segments with vehicles that are second-to-none.”
