SHENZHEN, China (AFP) — From its headquarters in south China, BYD Auto is pursuing a project of staggering ambition: To be in the lead as the world's cars free themselves from their century-old dependence on petrol.
The company, which was founded just 14 years ago and found success making batteries, has unveiled a series of slick electric and plug-in hybrids as it prepares to enter the US and European markets in 2011.
"In the next five to 10 years we will see big changes. Electrification will happen much sooner than people expect," said Henry Z. Li, BYD's soft-spoken general manager for auto exports, in an interview.
Whether he is right has implications not just for those who have put money in the company -- such as celebrity investor Warren Buffett -- but for the planet, with China now the top greenhouse gas emitter according to some counts.
The vision at BYD, or Build Your Dreams, is that of a future where electric cars fill the roads and quick-charge stations are as readily available as petrol stations today.
This dream remains a long way off, with big cost and technological barriers ahead.
Only next month will it start delivering the F3DM -- DM stands for "dual mode" -- which can go 100 kilometres (63 miles) on its battery, or 580 kilometres (360 miles) in hybrid mode with gasoline.
The model's initial appeal will be to corporate clients that can afford to buy a small fleet of hybrids and set up special facilities for recharging.
For the private Chinese consumer, the case for a hybrid is less obvious, and in order for this market to take off, it is important to build up a critical mass of vehicles that makes charging stations commercially viable.
BYD is in talks with utilities such as State Grid Corporation of China, and they are "interested", said Li, 40.
"It's a positive cycle. More electric cars, more charging stations. It's no use asking which comes first, the chicken or the egg. We have to put something out there first," he said.
It may seem like a huge leap to go from carving out a niche in China's embryonic market to aggressively expanding abroad and taking on the likes of General Motors, Chrysler and Ford, which also are exploring electric vehicles.
Some rivals duly voiced skepticism after BYD Chairman Wang Chuanfu told participants at last month's auto show in Detroit that he planned to kick off sales in the United States and Europe in just two years.
The company's relative lack of experience, having been in the auto business only since 2003, may be a disadvantage but its unique history could nevertheless put it in pole position, argued Jia Xinguang, an independent auto researcher based in Beijing.
"BYD has experience in making batteries. It's number two in the world for rechargeable batteries. It's got a technological advantage," he said.
Other companies have tried electric cars before -- and failed. But times have changed, observers said.
"The technology has advanced significantly since the electric vehicles of the 1990s," said John Patten, an expert on alternative fuel cars at Western Michigan University.
"The political climate is also much more receptive, and is in fact pushing this type of technology, which is environmentally beneficial, so people and politicians don't have to be sold on the benefits."
This goes for China too, where BYD just got a boost from the government in the form of a policy package to help the auto industry through the global economic crisis.
While details are still pending, the company is likely to benefit from a subsidy for clean vehicles, which could cut the 150,000-yuan (21,900-dollar) price tag for the F3DM, which is almost double the petrol-powered equivalent.
"It's difficult for people to accept this high premium. That's why government incentives are important," said Li.
The company got a different boost in September when Buffett's MidAmerican Energy Holdings said it had agreed to buy 10 percent in BYD Co., the parent of BYD Auto.
"It was a signal to the public that Warren Buffett recognised the battery technology and our future directions. He's a long-term investor," said Li.
Until recently, BYD was operating against the backdrop of rapidly rising crude prices. Now oil is plunging, but the company sees it as only a minor bump in the road.
"In the short term perhaps oil prices are up and down, but in the mid-term, long-term it has to go up, because it's a limited resource. We're looking more long-term, not just one to two years," said Li.
2009年2月19日星期四
Sector roundup: Auto parts retailers, oil cos
Among the sector activity stories for Thursday, Feb. 19, from AP Financial News:
NEW YORK (AP) - Shares of several auto parts retailers rose Thursday on better-than-expected earnings reports from Advance Auto Parts (nyse: AAP - news - people ) Inc. and O'Reilly Automotive Inc. (nasdaq: ORLY - news - people )
NEW YORK (AP) - Shares of oil companies lifted on Thursday as crude oil prices jumped on a report signaling an inventory decline.
NEW YORK (AP) - Airline stocks wavered Thursday amid a downturn in the broader market, as oil prices jumped on a government report that said oil reserves fell unexpectedly last week.
NEW YORK (AP) - Shares of several auto parts retailers rose Thursday on better-than-expected earnings reports from Advance Auto Parts (nyse: AAP - news - people ) Inc. and O'Reilly Automotive Inc. (nasdaq: ORLY - news - people )
NEW YORK (AP) - Shares of oil companies lifted on Thursday as crude oil prices jumped on a report signaling an inventory decline.
NEW YORK (AP) - Airline stocks wavered Thursday amid a downturn in the broader market, as oil prices jumped on a government report that said oil reserves fell unexpectedly last week.
Driving Fell, U.S. Auto Dealers Closed at Record Rates in 2008
U.S. motorists reduced driving by the most in 66 years in 2008 and auto dealerships closed in record numbers, reflecting a deepening recession that’s causing consumers to pull back.
Vehicle-miles traveled last year fell by 107.9 billion, or 3.6 percent, the Federal Highway Administration said in a report today. The Detroit-based consultant Urban Science said 881 dealers closed, with most coming in the fourth quarter.
The figures illustrate the toll on companies such as automaker General Motors Corp. and hotel-chain Marriott International Inc. from the falloff in household spending, which accounts for about 70 percent of the economy. The deterioration in miles began in November 2007, a month before the start of the current economic slump.
“Recession and the worst job losses in a generation have turned anything on wheels into road kill,” said Chris Rupkey, chief financial economist at Bank of Tokyo-Mitsubishi UFJ Ltd. in New York. “Americans are sticking closer to home and saving not spending, which is just the sort of consumer behavior that can turn a recession into a depression.”
Vehicle-miles traveled fell in December by 3.8 billion, or 1.6 percent, from the same month a year earlier, the 14th straight drop, the government said. The U.S. began collecting the data in 1942.
The cumulative driving decline for the 14 months was 115 billion vehicle miles, more than double a drop during the 1970s, the Federal Highway Administration said. During that period, the U.S. faced oil embargoes and soaring gasoline prices.
Driving slipped in four of five regions in December, led by a 4.8 percent drop in the West, which includes California. Miles in the Northeast rose 0.5 percent, the first increase for any region since April.
No Turnaround Soon
The increase is unlikely to be an early sign of an economic turnaround, said Nigel Gault, chief U.S. economist at IHS Global Insight in Lexington, Massachusetts.
Driving to and from jobs “lags a little bit behind because if firms see demand picking up, the first thing they’ll do is increase the hours of people already working before hiring new people,” he said.
The economy will contract 2 percent this year, the biggest U.S. economic decline since 1946, according to the median of 50 projections in a Bloomberg survey of economists taken Feb. 2 to Feb. 10. Even as President Barack Obama aims to save or create more than 3 million jobs with a stimulus plan, economists foresee an unemployment rate exceeding 8 percent through next year.
Economic Forecast
Further shrinking in the economy may dim prospects for GM and Chrysler LLC, which are seeking additional loans from the government.
GM, which has received $13.4 billion in aid, said this week it needs as much as $16.6 billion more, including $2 billion next month to keep operating. Chrysler LLC, which has gotten $4 billion, said it needs $5 billion more.
U.S. auto sales plunged 18 percent last year. The decline in auto dealerships was the biggest in annual recordkeeping that began in 1991, Urban Science said.
“We’ll see even more contraction in the next several years as the Detroit Three strategically rethink their retail counts,” John Frith, vice president of Urban Science, said in a statement.
Hotels are also feeling the pinch. Marriott, the biggest U.S. hotel chain, reported an unexpected fourth-quarter loss last week and forecast more weakness for the travel industry in 2009.
Vehicle-miles traveled last year fell by 107.9 billion, or 3.6 percent, the Federal Highway Administration said in a report today. The Detroit-based consultant Urban Science said 881 dealers closed, with most coming in the fourth quarter.
The figures illustrate the toll on companies such as automaker General Motors Corp. and hotel-chain Marriott International Inc. from the falloff in household spending, which accounts for about 70 percent of the economy. The deterioration in miles began in November 2007, a month before the start of the current economic slump.
“Recession and the worst job losses in a generation have turned anything on wheels into road kill,” said Chris Rupkey, chief financial economist at Bank of Tokyo-Mitsubishi UFJ Ltd. in New York. “Americans are sticking closer to home and saving not spending, which is just the sort of consumer behavior that can turn a recession into a depression.”
Vehicle-miles traveled fell in December by 3.8 billion, or 1.6 percent, from the same month a year earlier, the 14th straight drop, the government said. The U.S. began collecting the data in 1942.
The cumulative driving decline for the 14 months was 115 billion vehicle miles, more than double a drop during the 1970s, the Federal Highway Administration said. During that period, the U.S. faced oil embargoes and soaring gasoline prices.
Driving slipped in four of five regions in December, led by a 4.8 percent drop in the West, which includes California. Miles in the Northeast rose 0.5 percent, the first increase for any region since April.
No Turnaround Soon
The increase is unlikely to be an early sign of an economic turnaround, said Nigel Gault, chief U.S. economist at IHS Global Insight in Lexington, Massachusetts.
Driving to and from jobs “lags a little bit behind because if firms see demand picking up, the first thing they’ll do is increase the hours of people already working before hiring new people,” he said.
The economy will contract 2 percent this year, the biggest U.S. economic decline since 1946, according to the median of 50 projections in a Bloomberg survey of economists taken Feb. 2 to Feb. 10. Even as President Barack Obama aims to save or create more than 3 million jobs with a stimulus plan, economists foresee an unemployment rate exceeding 8 percent through next year.
Economic Forecast
Further shrinking in the economy may dim prospects for GM and Chrysler LLC, which are seeking additional loans from the government.
GM, which has received $13.4 billion in aid, said this week it needs as much as $16.6 billion more, including $2 billion next month to keep operating. Chrysler LLC, which has gotten $4 billion, said it needs $5 billion more.
U.S. auto sales plunged 18 percent last year. The decline in auto dealerships was the biggest in annual recordkeeping that began in 1991, Urban Science said.
“We’ll see even more contraction in the next several years as the Detroit Three strategically rethink their retail counts,” John Frith, vice president of Urban Science, said in a statement.
Hotels are also feeling the pinch. Marriott, the biggest U.S. hotel chain, reported an unexpected fourth-quarter loss last week and forecast more weakness for the travel industry in 2009.
Driving Fell, U.S. Auto Dealers Closed at Record Rates in 2008
U.S. motorists reduced driving by the most in 66 years in 2008 and auto dealerships closed in record numbers, reflecting a deepening recession that’s causing consumers to pull back.
Vehicle-miles traveled last year fell by 107.9 billion, or 3.6 percent, the Federal Highway Administration said in a report today. The Detroit-based consultant Urban Science said 881 dealers closed, with most coming in the fourth quarter.
The figures illustrate the toll on companies such as automaker General Motors Corp. and hotel-chain Marriott International Inc. from the falloff in household spending, which accounts for about 70 percent of the economy. The deterioration in miles began in November 2007, a month before the start of the current economic slump.
“Recession and the worst job losses in a generation have turned anything on wheels into road kill,” said Chris Rupkey, chief financial economist at Bank of Tokyo-Mitsubishi UFJ Ltd. in New York. “Americans are sticking closer to home and saving not spending, which is just the sort of consumer behavior that can turn a recession into a depression.”
Vehicle-miles traveled fell in December by 3.8 billion, or 1.6 percent, from the same month a year earlier, the 14th straight drop, the government said. The U.S. began collecting the data in 1942.
The cumulative driving decline for the 14 months was 115 billion vehicle miles, more than double a drop during the 1970s, the Federal Highway Administration said. During that period, the U.S. faced oil embargoes and soaring gasoline prices.
Driving slipped in four of five regions in December, led by a 4.8 percent drop in the West, which includes California. Miles in the Northeast rose 0.5 percent, the first increase for any region since April.
No Turnaround Soon
The increase is unlikely to be an early sign of an economic turnaround, said Nigel Gault, chief U.S. economist at IHS Global Insight in Lexington, Massachusetts.
Driving to and from jobs “lags a little bit behind because if firms see demand picking up, the first thing they’ll do is increase the hours of people already working before hiring new people,” he said.
The economy will contract 2 percent this year, the biggest U.S. economic decline since 1946, according to the median of 50 projections in a Bloomberg survey of economists taken Feb. 2 to Feb. 10. Even as President Barack Obama aims to save or create more than 3 million jobs with a stimulus plan, economists foresee an unemployment rate exceeding 8 percent through next year.
Economic Forecast
Further shrinking in the economy may dim prospects for GM and Chrysler LLC, which are seeking additional loans from the government.
GM, which has received $13.4 billion in aid, said this week it needs as much as $16.6 billion more, including $2 billion next month to keep operating. Chrysler LLC, which has gotten $4 billion, said it needs $5 billion more.
U.S. auto sales plunged 18 percent last year. The decline in auto dealerships was the biggest in annual recordkeeping that began in 1991, Urban Science said.
“We’ll see even more contraction in the next several years as the Detroit Three strategically rethink their retail counts,” John Frith, vice president of Urban Science, said in a statement.
Hotels are also feeling the pinch. Marriott, the biggest U.S. hotel chain, reported an unexpected fourth-quarter loss last week and forecast more weakness for the travel industry in 2009.
Vehicle-miles traveled last year fell by 107.9 billion, or 3.6 percent, the Federal Highway Administration said in a report today. The Detroit-based consultant Urban Science said 881 dealers closed, with most coming in the fourth quarter.
The figures illustrate the toll on companies such as automaker General Motors Corp. and hotel-chain Marriott International Inc. from the falloff in household spending, which accounts for about 70 percent of the economy. The deterioration in miles began in November 2007, a month before the start of the current economic slump.
“Recession and the worst job losses in a generation have turned anything on wheels into road kill,” said Chris Rupkey, chief financial economist at Bank of Tokyo-Mitsubishi UFJ Ltd. in New York. “Americans are sticking closer to home and saving not spending, which is just the sort of consumer behavior that can turn a recession into a depression.”
Vehicle-miles traveled fell in December by 3.8 billion, or 1.6 percent, from the same month a year earlier, the 14th straight drop, the government said. The U.S. began collecting the data in 1942.
The cumulative driving decline for the 14 months was 115 billion vehicle miles, more than double a drop during the 1970s, the Federal Highway Administration said. During that period, the U.S. faced oil embargoes and soaring gasoline prices.
Driving slipped in four of five regions in December, led by a 4.8 percent drop in the West, which includes California. Miles in the Northeast rose 0.5 percent, the first increase for any region since April.
No Turnaround Soon
The increase is unlikely to be an early sign of an economic turnaround, said Nigel Gault, chief U.S. economist at IHS Global Insight in Lexington, Massachusetts.
Driving to and from jobs “lags a little bit behind because if firms see demand picking up, the first thing they’ll do is increase the hours of people already working before hiring new people,” he said.
The economy will contract 2 percent this year, the biggest U.S. economic decline since 1946, according to the median of 50 projections in a Bloomberg survey of economists taken Feb. 2 to Feb. 10. Even as President Barack Obama aims to save or create more than 3 million jobs with a stimulus plan, economists foresee an unemployment rate exceeding 8 percent through next year.
Economic Forecast
Further shrinking in the economy may dim prospects for GM and Chrysler LLC, which are seeking additional loans from the government.
GM, which has received $13.4 billion in aid, said this week it needs as much as $16.6 billion more, including $2 billion next month to keep operating. Chrysler LLC, which has gotten $4 billion, said it needs $5 billion more.
U.S. auto sales plunged 18 percent last year. The decline in auto dealerships was the biggest in annual recordkeeping that began in 1991, Urban Science said.
“We’ll see even more contraction in the next several years as the Detroit Three strategically rethink their retail counts,” John Frith, vice president of Urban Science, said in a statement.
Hotels are also feeling the pinch. Marriott, the biggest U.S. hotel chain, reported an unexpected fourth-quarter loss last week and forecast more weakness for the travel industry in 2009.
2009年2月17日星期二
Anglo's SAfrica coal mine halts output after death
Anglo American Plc's (AAL.L) South African coal unit said on Tuesday it had shut a coal mine for one day after a worker died at the facility, but could not immediately quantify the lost output.
Anglo's Johannesburg-based spokesman, Pranill Ramchander, confirmed reports by the Solidarity trade union that the worker died in hospital after being hit by a vehicle on Monday at Anglo's Goedehoop coal mine in Witbank, east of Johannesburg.
The Department of Minerals and Energy (DME) and the mine's management were conducting investigations into the cause of the accident, Ramchander and the union said.
"I can confirm we had a fatality," Ramchander said. "We had to shut the mine down today (Tuesday), but we will resume production tomorrow. I can't immediately quantify how much output is likely to be lost."
Coal is ranked as the third most dangerous mining sector in South Africa after gold and platinum, Solidarity said, quoting figures supplied by the DME.
The DME has been routinely closing down mines on a temporary basis after a fatality, to put pressure on mining companies to improve safety.
A recent report showed that mines in South Africa, the world's top source of platinum and a major producer of gold, have a "disappointing" level of safety compliance.
The long-awaited safety audit on 355 mines nationwide revealed that mine safety compliance was at 66 percent, and the country's parliament has made amendments to laws that govern mines to introduce stricter safety measures and bigger fines to negligent mine managers. The amendments are yet to be signed into law. [ID:nL278055]
Anglo's Johannesburg-based spokesman, Pranill Ramchander, confirmed reports by the Solidarity trade union that the worker died in hospital after being hit by a vehicle on Monday at Anglo's Goedehoop coal mine in Witbank, east of Johannesburg.
The Department of Minerals and Energy (DME) and the mine's management were conducting investigations into the cause of the accident, Ramchander and the union said.
"I can confirm we had a fatality," Ramchander said. "We had to shut the mine down today (Tuesday), but we will resume production tomorrow. I can't immediately quantify how much output is likely to be lost."
Coal is ranked as the third most dangerous mining sector in South Africa after gold and platinum, Solidarity said, quoting figures supplied by the DME.
The DME has been routinely closing down mines on a temporary basis after a fatality, to put pressure on mining companies to improve safety.
A recent report showed that mines in South Africa, the world's top source of platinum and a major producer of gold, have a "disappointing" level of safety compliance.
The long-awaited safety audit on 355 mines nationwide revealed that mine safety compliance was at 66 percent, and the country's parliament has made amendments to laws that govern mines to introduce stricter safety measures and bigger fines to negligent mine managers. The amendments are yet to be signed into law. [ID:nL278055]
Company says Montana coal plant moving forward
An Australian company proposing a coal-to-liquids plant on a Montana Indian reservation said Tuesday that the project is moving forward despite the shrinking economy and low energy prices.
Australian-American Energy Co. also said the weekend death of Crow tribal Chairman Carl Venne, who was instrumental in the original deal, will not scuttle the project.
Company vice president Kenneth Roberts said the downturn in oil prices to less than $40 a barrel is not going to delay the $7-billion project, he said, even though the plant won't break even if oil prices are below $75 to $80 a barrel.
"We are not going to let any short-term setback, be it from the economic situation or otherwise, slow us down," Roberts told Gov. Brian Schweitzer in the Tuesday meeting. "The point is, we have a long-term view."
Roberts said the company has set up offices on the reservation and expects to have a site for the coal mine and factory within two years. The project is expected to turn the reservation's sizable coal reserves into 50,000 barrels a day of diesel and other fuels.
Another company from Australia, Ambre Energy recently announced its intentions to build a separate $375 million coal plant in southeastern Montana to produce high-efficiency coal and synthetic crude oil.
Australian-American Energy Co. also said the weekend death of Crow tribal Chairman Carl Venne, who was instrumental in the original deal, will not scuttle the project.
Company vice president Kenneth Roberts said the downturn in oil prices to less than $40 a barrel is not going to delay the $7-billion project, he said, even though the plant won't break even if oil prices are below $75 to $80 a barrel.
"We are not going to let any short-term setback, be it from the economic situation or otherwise, slow us down," Roberts told Gov. Brian Schweitzer in the Tuesday meeting. "The point is, we have a long-term view."
Roberts said the company has set up offices on the reservation and expects to have a site for the coal mine and factory within two years. The project is expected to turn the reservation's sizable coal reserves into 50,000 barrels a day of diesel and other fuels.
Another company from Australia, Ambre Energy recently announced its intentions to build a separate $375 million coal plant in southeastern Montana to produce high-efficiency coal and synthetic crude oil.
GM Seeks Up to $16.6 Billion More in Aid, Plans 47,000 Job Cuts
General Motors Corp. said it needs as much as $16.6 billion in new U.S. loans, more than doubling the aid to date, and must get some of the cash next month to survive. GM plans 47,000 more job cuts worldwide this year.
Chrysler LLC, propped up like GM with federal assistance, said it’s seeking $5 billion more from the government and will shed 3,000 more positions.
The automakers met a deadline today to report progress in revamping their operations with $17.4 billion in loans granted so far. Along with Ford Motor Co., they got a boost when the United Auto Workers said it reached tentative agreements to help trim labor expenses.
GM’s retrenchment includes closing an additional 5 U.S. plants by 2012. GM said it examined three bankruptcy scenarios, with price tags of as much as $100 billion, and that all were less-favorable options than a rescue.
GM said it needs at least $9.1 billion more in aid, or as much as $16.6 billion should the economy worsen. The biggest U.S. automaker has received $13.4 billion since December and, along with Chrysler, must show by March 31 how it will return to profit or risk having the U.S. Treasury Department recall the loans.
Production of Saturn cars would stop in 2011, if the brand hasn’t been sold, GM said. Should dealers or other investors present a proposal, GM “would be open” to a spinoff or sale of the unit, according to the Detroit-based automaker’s viability plan.
Chrysler’s Needs
Chrysler said it needs an additional $5 billion March 31 after receiving an initial installment of $4 billion. The new job cuts at the third-largest U.S. automaker would be in addition to 32,000 shed through the end of last year.
House Speaker Nancy Pelosi said she hopes the plans lead to “the transformation of our domestic automobile industry.”
President Barack Obama’s administration will determine whether the shared sacrifices required will bring about “reasonably restructured corporations,” Pelosi, a California Democrat, added in a statement.
Earlier, White House press secretary Robert Gibbs said a restructuring through bankruptcy for GM and Chrysler can’t be ruled out, while adding the industry is “tremendously important” to the economy.
“I wouldn’t preclude policy choices, particularly since we haven’t seen details,” Gibbs told reporters traveling with the president to Colorado. The auto companies “represent a huge part of our manufacturing base, and to have a strong and viable auto industry is tremendously important for the future.”
Rebuffing Bankruptcy
GM and Chrysler rebuffed that idea again today.
“All research indicates bankruptcy would have a dramatic impact on GM sales and revenue,” GM said in its 117-page plan, citing a study that concluded 80 percent of consumers wouldn’t buy a car from a bankrupt company. “A restructuring process outside of bankruptcy is highly preferable,” GM’s report said.
Bankruptcy “would create unbearable stress not only for our suppliers, but also the suppliers of other automakers,” Chrysler Chief Executive Officer Robert Nardelli in a briefing with reporters. “It would have a cataclysmic effect on the entire auto industry.”
Liquidating the Auburn Hills, Michigan-based automaker might cost 2 million to 3 million jobs, according to Chrysler’s plan.
GM fell 3.7 percent to $2.10 at 4:51 p.m. after regular New York Stock Exchange composite trading. Earlier, the shares sank 32 cents, or 13 percent, to $2.18, extending their decline over the past year to 92 percent. Chrysler is controlled by Cerberus Capital Management LP.
Talks With UAW
To meet loan requirements, GM and Chrysler have been trying to persuade the UAW to accept equity instead of cash for half of next year’s scheduled payments into union-run retiree health- care funds.
Discussions are continuing over how the companies will finance those trusts, the UAW said in an e-mailed statement announcing the preliminary agreement on other contract terms. Lower-cost labor contracts would help GM, Chrysler and Ford trim expenses amid the worst U.S. auto market since the early 1980s.
Chrysler President Tom LaSorda said the labor savings are enough to keep the federal loans.
The accord lowers labor costs to “competitive parity” with expenses at the U.S. factories of overseas automakers, Joe Hinrichs, Ford’s group vice president for manufacturing and labor affairs, said in a statement.
GM also is required by the government to cut two-thirds of its $27.5 billion in unsecured public debt to $9.2 billion, and the company has been in talks with bondholders.
GM’s 8.375 percent bonds due in July 2033 slid 0.63 cent to 15.13 cents on the dollar, yielding 55.1 percent, according to Trace, the bond-pricing service of the Financial Industry Regulatory Authority.
Chrysler LLC, propped up like GM with federal assistance, said it’s seeking $5 billion more from the government and will shed 3,000 more positions.
The automakers met a deadline today to report progress in revamping their operations with $17.4 billion in loans granted so far. Along with Ford Motor Co., they got a boost when the United Auto Workers said it reached tentative agreements to help trim labor expenses.
GM’s retrenchment includes closing an additional 5 U.S. plants by 2012. GM said it examined three bankruptcy scenarios, with price tags of as much as $100 billion, and that all were less-favorable options than a rescue.
GM said it needs at least $9.1 billion more in aid, or as much as $16.6 billion should the economy worsen. The biggest U.S. automaker has received $13.4 billion since December and, along with Chrysler, must show by March 31 how it will return to profit or risk having the U.S. Treasury Department recall the loans.
Production of Saturn cars would stop in 2011, if the brand hasn’t been sold, GM said. Should dealers or other investors present a proposal, GM “would be open” to a spinoff or sale of the unit, according to the Detroit-based automaker’s viability plan.
Chrysler’s Needs
Chrysler said it needs an additional $5 billion March 31 after receiving an initial installment of $4 billion. The new job cuts at the third-largest U.S. automaker would be in addition to 32,000 shed through the end of last year.
House Speaker Nancy Pelosi said she hopes the plans lead to “the transformation of our domestic automobile industry.”
President Barack Obama’s administration will determine whether the shared sacrifices required will bring about “reasonably restructured corporations,” Pelosi, a California Democrat, added in a statement.
Earlier, White House press secretary Robert Gibbs said a restructuring through bankruptcy for GM and Chrysler can’t be ruled out, while adding the industry is “tremendously important” to the economy.
“I wouldn’t preclude policy choices, particularly since we haven’t seen details,” Gibbs told reporters traveling with the president to Colorado. The auto companies “represent a huge part of our manufacturing base, and to have a strong and viable auto industry is tremendously important for the future.”
Rebuffing Bankruptcy
GM and Chrysler rebuffed that idea again today.
“All research indicates bankruptcy would have a dramatic impact on GM sales and revenue,” GM said in its 117-page plan, citing a study that concluded 80 percent of consumers wouldn’t buy a car from a bankrupt company. “A restructuring process outside of bankruptcy is highly preferable,” GM’s report said.
Bankruptcy “would create unbearable stress not only for our suppliers, but also the suppliers of other automakers,” Chrysler Chief Executive Officer Robert Nardelli in a briefing with reporters. “It would have a cataclysmic effect on the entire auto industry.”
Liquidating the Auburn Hills, Michigan-based automaker might cost 2 million to 3 million jobs, according to Chrysler’s plan.
GM fell 3.7 percent to $2.10 at 4:51 p.m. after regular New York Stock Exchange composite trading. Earlier, the shares sank 32 cents, or 13 percent, to $2.18, extending their decline over the past year to 92 percent. Chrysler is controlled by Cerberus Capital Management LP.
Talks With UAW
To meet loan requirements, GM and Chrysler have been trying to persuade the UAW to accept equity instead of cash for half of next year’s scheduled payments into union-run retiree health- care funds.
Discussions are continuing over how the companies will finance those trusts, the UAW said in an e-mailed statement announcing the preliminary agreement on other contract terms. Lower-cost labor contracts would help GM, Chrysler and Ford trim expenses amid the worst U.S. auto market since the early 1980s.
Chrysler President Tom LaSorda said the labor savings are enough to keep the federal loans.
The accord lowers labor costs to “competitive parity” with expenses at the U.S. factories of overseas automakers, Joe Hinrichs, Ford’s group vice president for manufacturing and labor affairs, said in a statement.
GM also is required by the government to cut two-thirds of its $27.5 billion in unsecured public debt to $9.2 billion, and the company has been in talks with bondholders.
GM’s 8.375 percent bonds due in July 2033 slid 0.63 cent to 15.13 cents on the dollar, yielding 55.1 percent, according to Trace, the bond-pricing service of the Financial Industry Regulatory Authority.
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