Detroit Bureau on Twitter

Posts Tagged ‘big 3 bailout’

GM Delivers $865 mil Q1 Profit

Strong numbers driven by new models, cost-cutting.

by on May.17, 2010

Cost-cutting, along with new models like this 2010 Chevrolet Equinox, helped GM deliver a strong first-quarter profit.


You may not be able to cost-cut your way to success, but it certainly helped General Motors during the first quarter of 2010, the long-troubled maker delivering a net profit of $865 million on $31.5 billion in revenues. 

Though currently a privately-held company, with the U.S. Treasury holding a 61% stake, GM reports that would have worked out to $1.66 a share, a sharp turnaround from just one year ago.  In the first three months of 2009, a period during which the U.S. auto industry melted down and the automaker started preparing for bankruptcy, GM reported a $6 billion loss, or $9.78 a share.

News, Reviews and More!

“We’re pleased with our first-quarter performance, particularly in achieving profitability,” said Chris Liddell, GM’s new Chief Financial Officer.  He pointed to the success of new models — such as the Chevrolet Equinox — as well as cost control, improved sales in emerging markets and improved cash flow as “important steps as we lay the foundation for a successful GM.” 


Marchionne: Chrysler Rushing New, Fiat-Based Models to Market

CEO believes U.S. maker on track to beat 2010 targets; IPO could be coming.

by on May.11, 2010

Chrysler/Fiat CEO Sergio Marchionne wants to rush more product into U.S. showrooms ASAP.

Desperately short of new product, Chrysler may get a helping hand from Italian partner Fiat sooner than originally planned, according to the man who heads both companies.

Several compact-based Fiats could be on the market by the end of the 2011 calendar year, said Chairman and CEO Sergio Marchionne, in a conference call.

Meanwhile, said the Canadian-educated Marchionne, Chrysler is on target to beat its financial targets for this year, which could make it possible to push for an IPO, or public stock offering, “as quickly as we can.”

After a series of significant setbacks, Chrysler has been reporting a smattering of positive news, including an unexpected first-quarter operating profit of $143 million and an April sales increase that was the maker’s biggest year-over-year gain since 2005.

Sign Up...It's Free!

But analysts contend that the maker still needs an infusion of new models to truly move ahead.  The plan calls for relatively little in the coming months, though the replacement for the Grand Cherokee is considered a first critical step.


Ford Competitive Despite Higher Debt, Other Issues

CEO promises to continue improving competitive position.

by on Apr.02, 2010

Ford "is competitive" despite a hefty debt load and an inability to match the concessions given GM and Chrysler, said CEO Alan Mulally.

Ford Motor Co. is fully competitive with its domestic rivals, and indeed with the rest of the auto industry, the automaker’s CEO Alan Mulally, tells, despite its hefty debt load and its inability to win all the concessions it has sought from its U.S. workers.

There’s little doubt Ford is on a roll, industry analysts praising the efforts Mulally has made since joining the company, in 2006, and consumers responding well to the company’s latest product line-up.  But those analysts also caution that there’s a downside that some believe could haunt the company.

Ford was the only one of Detroit’s Big Three to forego a federal bailout, last year, and to avoid plunging into bankruptcy like Chrysler and General Motors.  “I’m pleased we respected all of our debt-holders and all of our stockholders,” Mulally proclaimed, following his keynote speech marking the opening of this year’s New York International Auto Show.

Subscribe Now!

But the downside is that Ford couldn’t shed its tens of billions of dollars in debt like its cross-town rivals.  And today, that adds up to millions of dollars in interest, alone, that Ford is covering while Chrysler and GM are not.  That, said Mulally, is why Ford has been paying down its debt, converting some to equity, last year, and now scheduling another cash payment for its $23 billion “revolver,” the business equivalent, he suggested, of a home equity line.

“We’re going to keep improving the balance sheet,” he explained, in an interview, “but keep the entire revolver in place.”


Ford Salaried Workers In Line For Bonuses

Maker promises to share the spoils.

by on Mar.30, 2010

Ford is taking steps to reduce debt -- and reward its loyal workforce.

After a three-year wait, more than 20,000 salaried Ford workers are in line to collect bonus pay again – along with a return of merit pay increases.

Though Ford officials caution the maker must hit a number of targets before the money lands in the hands of its employees, even the prospect of bonuses comes as good news for a company that has faced some serious economic challenges in recent years.  But it also underscores the apparent success Ford is having, even as its crosstown rivals struggle after last year’s bankruptcies.

Free Subscription!

The exact size of the payout is unclear, and will likely vary from worker to worker.  In 2007, bonuses ran as high as $15,000.


Ford Ratings Get a Boost

Partially closes a competitive disadvantage.

by on Mar.19, 2010

Ford is still saddled with more debt than its domestic rivals, but a better debt rating helps offset this competitive disadvantage.

Ford Motor Co. comeback drive got another boost this week when Moody Investor Services bumped up the rating on Ford’s outstanding debts. The rating change should reduce Ford’s borrowing costs – a critical matter since while the automaker was able to avoid bankruptcy, last year, it now carries significantly more debt than Chrysler and General Motors, which both used Chapter 11 to wipe out most of their own liabilities.

Ford had no official comment on the upgrade but senior executives, such as chief financial officer Lewis Booth, have been quietly lobbying for the move, which offsets one of the last remaining competitive disadvantages facing Ford.

Subscribe for Free!

Moody’s raised Ford Motor’s senior unsecured debt rating by one notch to B3, which is still six notches into junk status. It also raised the corporate family rating and probability of default rating by a notch to B2, which actually means Ford is less likely to default on its securities, and secured credit facility by a notch to Ba2, placing it two notches into junk.

“Ford clearly has a much more robust and competitive business model that is capable of supporting significant improvement in performance over time,” said Moody’s senior vice president Bruce Clark.


The Top Ten Auto Stories of 2009

Bankruptcies, bailouts, recalls, oh what a bad year it was!

by on Dec.30, 2009

Brother, can you spare a dime? The jet-setting Detroit Three at hearings: left, fired GM CEO Rick Wagoner, ex Chrysler CEO Bob Nardelli, middle, Ford's surviving CEO Alan Mulally, right.

Every December, a group of auto scribes gathers together to share some good cheer and see how we did at predicting the events of the unfolding year. To be honest, even the best of the group failed to come close to calling the big stories of 2009.

No surprise, really, when you consider the strange twists and turns the auto industry has taken during the last 12 months.  Even the best fiction writers would have had trouble scripting this plot.

Sure, there were signs that the auto industry was slumping, and that the Detroit’s Three were in trouble, but having both General Motors and Chrysler go bankrupt?  And the U.S. government become majority owner of GM, with Italian automaker Fiat controlling Chrysler?  And what about Toyota?  Twelve months ago, most of us were writing about the fact that the giant Japanese automaker seemed certain to become the world’s largest automaker, finally overtaking troubled GM.  So, who could have begun to suspect all the problems that would follow for Toyota in 2009?  And what about the unexpected rise of the Chinese?

Top Ten!

But I’m getting ahead of myself.  The fact is, there were so many big stories in 2009 it may be impossible to come up with a fair, accurate and complete list of the 10 Top Auto Stories that everyone will agree on.  But I’ll try.

And would like to encourage readers to come up with the stories they would add to the list.  Just go to the Comments section at the end of this story.


Mulally Still Sticking With the Basics

What a difference a year makes, says Ford CEO.

by on Dec.21, 2009

Ford has received a big payoff for not taking a federal bailout, like its crosstown rivals.

Like a coach that has found a successful formula, Ford Motor Co. CEO Alan Mulally said he plans to keep the company focused on its basic plan of emphasizing steady and continuing improvement in the company’s products. “We’re going to maintain a laser like focus on the plan,” he said.

“What a year. It was a fantastic year,” said Mulally, following a background briefing with reporters, adding that the domestic industry is in better shape than it was only a year ago when Detroit’s automakers had been castigated on Capitol Hill after appealing for federal aid. “What a difference going into this auto show,” said Mulally.


Mulally, who is now Detroit’s most senior CEO, said he was glad his presence in Washington helped General Motors and Chrysler win government support.  Other governments support their auto industries, he said.


Ford Debt Rating Raised, But Still Junk

More good news for Dearborn maker.

by on Sep.08, 2009

Ford's turnaround program has won the endorsement of Moody's, which has increased its ratings on the automaker's still substantial debt.

Ford's turnaround program has won the endorsement of Moody's, which has increased its ratings on the automaker's still substantial debt.

Ford Motor Co. got some good news last week as Moody’s Investor Service raised its rating of the company’s corporate debt for the first time in 14 years.

However, Moody’s continues to rate Ford as junk, or below investment grade, but changed the “Corporate Family Rating of Ford to Caa1 from Caa3. Moody’s also raised the company’s Speculative Grade Liquidity (SGL) rating to SGL-3 from SGL-4.

Moreover, Ford’s rating outlook was changed to stable from negative. In a related action, Moody’s placed the Caa1 senior unsecured rating of Ford Motor Credit Company LLC on review for a possible upgrade.

It was of course the rating agencies that said mortgage backed securities and other derivatives were AAA rated or virtually risk free, which was at the heart of the collapse of the global financial markets that led to the Great Recession, which is ongoing. With U.S. unemployment growing to almost 10% in August, the economy continues to shed workers, as businesses return to profitability by eliminating middle class jobs or moving them offshore.

“The rating actions reflect Moody’s belief that after a period of intensive restructuring of its operations and balance sheet, Ford’s business viability has significantly improved. The positioning of the CFR rating at Caa1 balances the substantial achievements the company has made in restructuring its operations and rebuilding competitiveness against the expectation that even with these improvements meaningful earnings and cash flow generation will not be evident before 2011,” said Moodys in a statement.

Translation: more red ink until two years from now.

It's Debt Free!

It's Debt Free!

“Moody’s believes that Ford has adequate liquidity to bridge itself until 2011 as reflected in the upgrade of the SGL rating to SGL-3.”

Ford has been receiving some good news, lately, but there had been some concern about the fact that the company, by not going into bankruptcy, like General Motors and Chrysler, remained saddled with a significant amount of debt.  But while Ford does continues to carry substantial debt on its balance sheet, the upgrade reduces the automaker’s borrowing costs, freeing up cash for other uses such as product development.