Automakers rush plans for Congress

GM’s board began to review the top U.S. automaker’s revamped business plan on Sunday and has been asked to endorse steps that include consideration of dropping or selling off the Pontiac, Saab and Saturn brands, according to people with knowledge of the plan, which will be announced on Tuesday.

Ford Motor Co, considered a better bet to survive on its own because of its bigger cash position, said it would review its options for Volvo and could sell off the Swedish luxury brand.

Chrysler LLC, now controlled by Cerberus Capital Management, said its board was meeting to review the plan leading lawmakers have demanded by Tuesday ahead of potentially make-or-break hearings set for later in the week.

Chrsyler, widely seen as the most vulnerable of the Detroit Three, needs to spell out a plan that would allow it to take a share of the federal funding even as it seeks a partnership with other automakers, analysts said.

“Just as General Motors is too big to fail, Chrysler is too small to survive on its own,” said IHS Global Insight analyst Aaron Bragman.

Plans from all three Detroit automakers are expected to cap executive compensation while pointing toward new concessions expected from the United Auto Workers union, analysts said.

The union is likely to be asked to give up job security guarantees for workers at U.S. plants that close and asked to renegotiate how the automakers will pay into a trust fund set to take over responsibility for retiree health care from 2010.

In addition, GM is almost certain to ask its bondholders to swap some portion of its existing US$44 billion debt in exchange for a deeply discounted payout and some equity interest in the restructured company, analysts say.

Under fire for fighting fuel economy standards for years, the Detroit-based automakers also are expected to detail plans to build more fuel-efficient cars and roll out alternatives to gas-powered vehicles.

The industry’s appeal for aid will be scrutinized this week in two hearings. The Senate Banking Committee will hold a session on Thursday morning, and the House of Representatives Financial Services Committee on Friday morning.

Subscribe to The China Post and save 25%. Click here

SharePrintEmail

Write a Comment

Terms

Enter your comments - 3000 characters max

Type in image code

Submit

 Receive China Post promos
 Respond to this email