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Posts Tagged ‘chrysler bailout’

Government Lost $9.26 Billion Saving Auto Industry

Treasury made more than $2 billion on GMAC deal.

by on Dec.30, 2014

The Treasury exited GM more than four years after the maker's 2009 bankruptcy.

The U.S. government lost less than $10 billion rescuing the auto industry, which was four times less than some estimates.

The Treasury initially estimated the loss would be $44 billion, but revised it to $30 billion in 2009. Under government accounting rules, the U.S. Treasury actually lost $16.56 billion on paper because interest and dividends paid isn’t applied toward the principal owed.

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The government was repaid through a combination of stock sales, partial loan repayments, dividends and interest payments. (more…)

Fiat Completes Chrysler Takeover

A day late but definitely not a dollar short.

by on Jan.21, 2014

Sergio Marchionne, now chairman of a united Fiat-Chrysler, and Fiat Chairman John Elkan during the Detroit Auto Show.

The news comes a day later than originally promised but after establishing their alliance nearly five years ago, suburban Detroit-based Chrysler Group is now a wholly-owned subsidiary of Fiat SpA.

The partnership began in 2009 when the Italian maker came to the rescue of the bankrupt Chrysler.  Since then, Fiat steadily expanded its stake in the U.S. maker, announcing a deal on January 1st to purchase the remaining shares of Chrysler held by the United Auto Workers Union’s retiree health care trust, known as a VEBA.

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At that time, Fiat had indicated it would complete the takeover by January 20th. But there appears to have been no last-minute hitch, just the fact that “It was a holiday yesterday,” explains Richard Gadeselli, the London-based Fiat spokesman adding that there have been “no changes whatsoever” to the terms announced on New Year’s Day.

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Chrysler Gets Creative to Bolster Bottom Line

Automaker renegotiates key loan.

by on Dec.24, 2013

Fiat-Chrysler CEO Sergio Marchionne continues to push off an IPO for the U.S. automaker.

The Chrysler Group has found another way to bolster its bottom line.

The automaker has taken advantage of favorable market conditions to reduce the interest rate on the $2.9 billion term loan that helped it pay off the financial obligations to the U.S. and Canadian governments run up during its post-bankruptcy bailout.

“Under current market conditions, this action reduces the annual interest cost for the term loan by approximately $22 million. The term loan maintains a maturity date of May 24, 2017,” Chrysler said in a statement.

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The loan was negotiated in 2011 and used to repay the federal  and Canadian governments which had loaned Chrysler  a total of $7.6 billion after it emerged from bankruptcy in 2009. Chrysler paid off the $5.9 billion loan from the U.S. Treasury and the $1.7 billion loan from Canadian government six years ahead of schedule to get out from under what Fiat/Chrysler CEO Sergio Marchionne described as onerous terms.

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Tesla, Chrysler Get into Sniping Match

Makers dispute who paid off the government first.

by on May.23, 2013

Tesla CEO Elon Musk boasts his automaker was first to completely pay off its federal loans.

It began with a seemingly innocuous statement from Tesla Motors but has quickly escalated into a spitting match with Detroit’s third-largest automaker, Chrysler.

On Wednesday, the battery-car start-up announced that it would pay back the remaining $451.8 million that it owes the U.S. Energy Department nine years ahead of schedule, using money it expects to raise from an upcoming, $1.1 billion stock offering.

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That prompted the irrepressible Elon Musk, the constantly tweeting Tesla CEO, to declare that Tesla will become “the only American car company to have fully repaid the government.”

Or will it? Not according to Chrysler.

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Auto Bailout Loss Estimate Dips – Still Likely to Top $20 bil

GM’s stock rebound helps cut projected cost to taxpayers.

by on Feb.12, 2013

Though it has slipped in recent days, GM stock is up sharply since last summer, meaning a significant decline in likely bailout losses.

With General Motors’ stock rising by as much as 60% since last summer, the long-term cost of the 2009 auto industry bailout has shrunk substantially – but would still top $20 billion at the current GM share price, according to the latest report on the rescue by the U.S. Dept. of the Treasury.

The government began propping up both General Motors and Chrysler – and their finance subsidiaries – in late 2008, under the outgoing Bush Administration, as it became increasingly likely the two makers would plunge into bankruptcy. The rescue effort was ramped up after the Obama Administration came into power, ultimately raising the investment to $85 billion.

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Initially, the Treasury warned that it might lose as much as $44 billion as GM and Chrysler filed for Chapter 11.  The price tag has since risen and fallen repeatedly, largely based on the stock price of the remaining government holdings in General Motors.

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It’s Chrysler’s Turn to Save Fiat

Increasingly healthy, Amerian automaker offsets mounting losses in Europe.

by on Nov.16, 2012

Reporters catch the speech by Fiat/Chrysler CEO Sergio Marchionne at the Mack Engine Plant.

Chrysler Group LLC operations in the U.S. are profitable enough to support Fiat indefinitely during the unfolding European economic crunch, according to Sergio Marchonne, who serves as chief executive officer of both companies.

Fiat is sitting on more than $12 billion in cash, and “It has more resources in its industrial business,” Marchionne told reporters after announcing plans to invest $240 million as Chrysler creates 1,250 new job in the Detroit area over the next year by adding a third crew at its truck assembly plant in the suburb of Warren, and brings an engine plant in Detroit back online.

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Chrysler has rapidly expanded its operations – reviving several abandoned plants and adding thousands of new jobs – since Fiat effectively took control following the U.S. maker’s bankruptcy in 2009.  Now, it appears to be returning the favor as Fiat’s losses mount in the wake of the worst economic crisis Europe has faced in decades.

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Auto Industry Helped Tilt Vote Towards Obama

Claims about Jeep and GM backfire for Romney.

by on Nov.07, 2012

Then-candidate Barack Obama looks under the hood of a Jeep in 2008. Obama's fortunes - and his re-election - have been tied to the auto industry.

Even as analysts pour over the data trying to get a clear understanding of what led President Barack Obama to victory on Tuesday, there’s a growing sense that the auto industry played a significant role, especially in the key battleground state of Ohio.

One of the most bitterly fought presidential campaigns in decades revealed significant strengths and weaknesses for both candidates. But as so often happens, external events – such as Superstorm Sandy – and campaign missteps including “inaccurate” last-minute claims about General Motors and Chrysler may have had as much of an impact on key voters as the debates, the endless political commercials and the long lists of endorsements claimed by either side.

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Perhaps nowhere is that more apparent than in Ohio, where voters’ decision in favor of the president was reported by the various TV networks as pushing Obama to re-election shortly after 11 PM EST.  CNN’s chief political analyst John King, who repeatedly parsed the results from swing states down to the county level, noted that while much of Ohio was “red,” the color assigned to Republicans, “the industrial north is solidly blue” in a corridor that took in automotive manufacturing centers such as Toledo and Cleveland and its suburbs.

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Survey: Many New Car Buyers Think General Motors Will Have to File Bankruptcy Again

Chrysler less likely to go bankrupt again, respondents say.

by on Sep.24, 2012

Twenty-two percent of new-car intenders believe General Motors will have to file bankruptcy again in a few years. Despite that, several GM cars, including the Chevrolet Volt, set monthly sales records in August.

A new report from an automotive industry newsletter says nearly a quarter of all potential car buyers are concerned that General Motors will file for bankruptcy again within the next few years.

CNW Research’s Auto Industry Summary reports that just 3½ years after filing bankruptcy, 22 percent of new-car intenders expect General Motors to seek bankruptcy protection again.

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Across town, just eight percent of new-car intenders expect Chrysler to file for bankruptcy protection again, down from 34 percent two years ago.

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Auto Bailout Cost Now Upped to $25 Billion

GM’s stock plunge adds to likely loss.

by on Aug.14, 2012

GM's performance in the stock market will determine how much of the bailout is repaid.

American taxpayers could wind up losing as much as $25 billion on the 2008 – 2009 automotive bailout, according to a new report, a figure that has increased by 15% since an earlier forecast, in large part representing the significant downturn in General Motors’ stock price.

Beginning with the outgoing Bush Administration in 2008 and continuing once Pres. Barack Obama took office the following year, the U.S. Treasury invested $85 billion to help the domestic industry survive the deep recession – primarily to fund the post-bankruptcy turnarounds at GM and Chrysler.

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But, in a report sent to Congress, the White House raised to $25.1 billion the amount it said it cannot now expect to recover – primarily by selling off the remaining 26% stake it still holds in GM.  The previous quarterly estimate was $21.7 billion. On the other hand, the latest figure is about 45% less than the $44 billion the Obama Administration had once predicted.

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Romney: I Saved Auto Industry by Opposing Bailout

GOP presidential candidate wants some credit for Detroit turnaround.

by on May.08, 2012

GOP presidential contender Mitt Romney has tried to benefit from opposition to the auto bailout - but now wants credit for its success.

Despite his strong opposition to the federally funded bailouts of General Motors and Chrysler, presumptive Republican presidential nominee Mitt Romney insists he also deserves some of the credit for saving the domestic auto industry.

During a Rust Belt campaign swing, the Michigan native told interviewers he should get “a lot of credit” because he pushed the idea of a managed bankruptcy, the route the Obama Administration used to held shed the crushing debt that drove GM and Chrysler into seeking Chapter 11 protection.

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“I pushed the idea of a managed bankruptcy, and finally when that was done, and help was given, the companies got back on their feet,” Romney said in an interview with a Cleveland TV station during a visit to an auto parts manufacturer. “So, I’ll take a lot of credit for the fact that this industry has come back.”

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