GM: Never Mind That $14.4 Billion Loan

More good news for American automakers! The Department of Energy was due to loan General Motors $14.4 billion for production of fuel-efficient vehicles, but the automaker is saying it doesn't need the money. Citing improved financial performance, GM has withdrawn its loan application.

CNN reports:

"This decision is based on our confidence in GM's overall progress and strong, global business performance," Chris Liddell, GM's vice chairman and Chief Financial Officer said in a statement.

GM's loan application predated the automaker's federal bail-out and bankruptcy. It was to be part of the DOE's Advanced Technology Vehicles Manufacturing Loan Program authorized by Congress in December, 2007.

That program was set up to help cash-strapped automakers build new highly fuel-efficient cars and comply with new stricter fuel economy rules.

The application process was "almost completed," GM spokesman Tom Wilkinson said, but the loan had still not been approved and GM never received any of the money.

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GM Could Get $45 Billion Tax Break, Thanks to Bailout

General Motors is expected to receive over $45 billion in tax breaks because of its government-financed restructuring. The huge tax incentive is a result of their federal bailout, which will allow GM to apply a tax credit to previous losses and business expenses.

DailyFinance.com reports

This is unusual because GM has changed ownership. Normally, when a company restructures, the government imposes limits on this form of tax benefit.

The government inserted this clause in the bailout in order to make companies that benefited from the TARP program more attractive to investors. The rationale was that this would be a better deal for taxpayers because it would stop the bailed out companies from going out of business altogether.

"The Internal Revenue Service has decided that the government's involvement with these companies, both its acquisitions plus its disposals of their stock, means they should be exempt" from the rule, Robert Willens, a New York tax consultant, told The Journal.

The $45.4 billion in future tax savings is made up of $18.9 billion in carry-forwards based on past losses and savings related to costs such as pensions and property.

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483 Million GM Dollars = 483 New Jobs

Earlier this week General Motors announced their plans to invest $483 million in to their Spring Hill, Tennessee plant, which they claim will create 483 jobs. GM also explained that employees who had been laid off will be brought back to work at the new plant.

CNNMoney.com reports

Mark Reuss, president of GM North America, said his company would invest the money in the powertrain factory through 2012.

"By coincidence, the result in new jobs is 483," he said, before a crowd of cheering auto workers. "No, we didn't plan it that way."

The additional investment and jobs are pending successful incentive negotiations with local and state officials, GM said in an announcement.

The additional employees will be brought back from among workers GM had earlier laid off. The plant already builds three versions of GM's Ecotec four-cylinder engine. The additional jobs are needed to add production of a next-generation variant of the engine which, GM said, is more fuel efficient and runs more smoothly.

"The engines made in Spring Hill will drive the success of GM to meet our customer demands for advanced powertrains which offer high fuel economy without sacrificing performance," said Reuss, in a corporate announcement.

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Interest in the Cash for Clunkers Program Diminishing Already?

Just barely a week after launching, it looks like the public’s interest in the new Cash for Clunkers program is already fading. Although car dealerships and showrooms were overwhelmed with traffic earlier last week, when sales reportedly topped 250,000.

"We see that interest dying down," Edmunds.com Senior Analyst Michelle Krebs said in an interview on the consumer auto industry resource group's analysis of buyer intentions. "It's still high. It's better than pre-clunker levels, but it's off its peak."

Krebs said the original $1 billion funding for the program was "very low in relation to the size of the auto market." This, she said, created a "Gold Rush" mentality where consumers stormed dealers at the end of July and in the first days of August to cement discounts with rebate funding running low.

The "clunker" initiative offers rebates of up to $4,500 when consumers trade in older cars for more fuel efficient new ones. Dealers say buyers are trading in mainly sport utilities, pickups and other U.S.-made vehicles for fuel stingy foreign-made passenger cars.

Automakers credited "clunker" trade-ins for boosting July sales to the best annualized rate for 2009, a year in which carmakers have contended with a devastating decline in business. The horrid, recession-driven sales environment contributed to bankruptcies at General Motors Co and Chrysler this spring.

With Bankruptcy Looming, a New GM Begins to Emerge

From the Associated Press:

With an almost certain bankruptcy filing days away, General Motors is beginning its reinvention, planning to retool one factory to make its smallest vehicles ever in the U.S. and rid itself of the biggest.

As GM's board began two days of meetings Friday to make a final decision on the company's fate, GM was also closing in on a sale of its European Opel unit, and its main union overwhelmingly approved dramatic labor cost cuts. A deal to sell its rugged but inefficient Hummer brand also appeared on the horizon.

The moves provided more clues about what a restructured GM might look like ahead of the expected Chapter 11 filing Monday. Taxpayers will eventually own nearly three-quarters of a leaner GM, with a total government commitment of nearly $50 billion.

GM has yet to confirm it will seek bankruptcy protection but scheduled a news conference for Monday in New York.

With the government's backing and nearly $20 billion in U.S. loans so far, the company has made more dramatic changes in just a few days than it has in decades.

"It's been coming to a head for a very long time," said Aaron Bragman, an analyst for the consulting firm IHS Global Insight. "But in just the past few months we've really seen steps being taken to completely and dramatically change the face of American auto manufacturing."

GM said it plans to reopen a shuttered U.S. factory to build subcompact cars. The retooled factory would be able to build 160,000 cars a year and create 1,200 jobs, offsetting some of the 21,000 that will be lost when GM closes 14 factories by the end of next year.

GM's stock tumbled to the lowest price in the company's 100-year history, closing at just 75 cents after trading as low as 74 cents. The government plan for GM revealed Thursday would make the shares virtually worthless.

The United Auto Workers' reluctant but overwhelming ratification of concessions will save GM $1.3 billion per year and bring its labor costs down to those of its Japanese competitors. The new UAW deal freezes wages, ends bonuses and eliminates some noncompetitive work rules.

The changes, plus others that will be worked out in court, will shrink GM and position it to be among the world's most competitive automakers if it can emerge from bankruptcy protection and survive the global auto sales slump, Bragman said.

Romney Balks at Government Ownership of GM

With dozens of headlines surrounding General Motors and their bankruptcy filing, Republican leader Mitt Romney spoke to the Detroit News on how the government should handle the auto marker’s restructuring. Check out the article below.

The Obama administration and the United Auto Workers should immediately distribute their stock in a restructured GM to American taxpayers, former Republican presidential candidate Mitt Romney said Sunday.

"We don't want a president and the head of the UAW running General Motors," Romney, a Michigan native and son of former Gov. George Romney, said in an appearance on "Fox News Sunday."

Romney suggested that the roughly 70 percent of GM that the government could own after it emerges from bankruptcy should be immediately distributed to taxpayers, and the 17.5 percent that will go to a UAW trust fund for retiree healthcare should be handed out to UAW members.

Such a scheme is highly unlikely. The Obama administration has signaled that it wants to sell its stake as soon as possible, but wants to ensure that it recoups as much as possible of the billions of taxpayer dollars already pumped into the company. The UAW is likely to try to maximize the return it receives on its shares to boost its ability to pay for healthcare for retirees.

Romney repeated his criticism of the auto policies followed by both the Bush and Obama administrations, saying GM and Chrysler should have been pushed into a restructuring, either in or out of bankruptcy court, months ago.

New GM Concept Camaro

GM car czar Bob Lutz announced a new Camaro concept car on one of his recent posts on the Fastlane Blog. He describes the new car as being remarkable claims the new Camaro is intended to be "the finest car in its class, ever." Check out a picture of the concept car below, thanks to the GM Fastland Blog.

GM May Have 60,000 Volt Electric Cars Out In 2011

Insiders at GM have revealed that the auto-maker may be planning to have over 60,000 of their Volt electric cars on the road within one year of launching in 2010. GM product chief Bob Lutz said he plans to sell the first Volt by late 2010, and expects to have prototypes ready for testing early next year. Insiders claim that production is set to produce 60,000 vehicles for the official launch, however GM spokesman Scott Fosgard declined to comment on the plans. ``If they {GM} were able to get 30,000 to 60,000 on the road in a year, it would be a huge leap in technology,'' claims Brett Smith, an alternative-fuel analyst in Ann Arbor, Michigan. ``It will be difficult, though, because there are so many barriers to making this happen.'' Source: Bloomberg.

GM Fuel Cell SUVs Go 300 Miles

According to the Cincinnati Enquirer, General Motors Corporation set a new world record last week when their Sequel SUV fuel-cell vehicles were each driven 300 miles on public road using only one tank of hydrogen. The point of the drive was to prove that the vehicle was ready for the public, and that it could travel long distances without problems. "This is a very significant event to us," notes Larry Burns, Vice President of Research, Development and Planning. "Our goal was to go 300 miles because that is what our customers tell us they need. This is a vehicle that can carry four or five passengers, but this is also a vehicle that emits just water. We are in the infancy of a whole new automobile." The test came just one day after President George W. Bush announced his plans to increase vehicle fuel-economy standards by the end of 2008.

Nissan and GM Hybrids Still Qualifies for Tax Credit

The IRS recently announced that purchasers of qualified Nissan and GM vehicles may continue to claim the Alternative Motor Vehicle Credit. The announcement comes after the IRS concluded its quarterly review of the number of hybrid vehicles sold. Nissan only sold 2,094 qualifying vehicles to retail dealers, while GM sold 2,927 qualifying vehicles to retail dealers in the quarter ending March 31, 2007.

The allowable credit amount for the vehicles is as follows:
Altima Hybrid — Nissan’s only certified hybrid vehicle — $2,350.
Chevrolet Silverado Hybrid 2WD — $250
Chevrolet Silverado Hybrid 4WD — $650
GMC Sierra Hybrid 2WD — $250
GMC Sierra Hybrid 4WD — $650
Saturn Vue Green Line — $650
Saturn Aura Hybrid — $1,300