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U.S. General Motors and Chrysler welcomed the exam today after breathing for 66 days. As a condition of the previous federal government aid, the two companies must submit a restructuring plan to the Obama administration today. The current cash flow of GM, which has received major assistance, continues to deteriorate, but the company reiterated yesterday that it will not file for bankruptcy protection.
May ask for more financial assistance
In December of last year, the U.S. government decided to give GM and Chrysler US$17.4 billion in emergency assistance and asked the two companies to reduce employee compensation and control spending. However, the huge expense of employee benefits has become a common headache. Foreign media reported that General Motors and the union’s negotiations on employee medical funds broke down on the 13th. The union asked GM to inject $20.4 billion into employee health funds. In addition, GM’s current liabilities are as high as $41.6 billion. The U.S. government requires GM to reduce its "high-risk" debt raised to society by more than two-thirds. It is also difficult for GM to hope that the creditors’ idea of ​​taking $18 billion of debt for company shares will be difficult to implement. Car sales still fell sharply.
There are signs that the general cash flow situation is further deteriorating. Foreign media said yesterday that GM has begun to apply for bankruptcy protection.
In response, the person in charge of the GM China company said in an interview with Nanfang Daily yesterday that the above report was false. The person in charge said that the GM’s board of directors had previously discussed bankruptcy issues and did not think it was a viable solution to the company’s current financial difficulties. The management of the company believes that the cash flow problem is caused by the current deterioration of the global financial and credit markets. If the consumer confidence caused by the application for bankruptcy protection shrinks, it will further worsen the company’s cash flow problem. The General Motors Board is further monitoring the developments and will consider all possible options. "There are no substantial changes at present."
The above-mentioned person in charge also revealed that after submitting the business reorganization plan today, the head of GM will continue to discuss with the U.S. president-appointed personnel and the U.S. Treasury Department.
Foreign media quoted informed sources as saying that the reorganization plan will surely require more financial assistance. It may apply to postpone the completion of the specific restructuring at the end of March by at least several months. For the newly appointed Obama administration, how to welcome the GM once again will make it difficult. If the government does not continue to provide assistance to make GM go bankrupt, it will face the political risk that millions of people will lose their jobs.
Another aided company, Chrysler, has already formed an alliance with the Italian Fiat Auto Plan. The restructuring plan submitted by the company today will be more clear.
Continue accelerating the development of the Chinese market
How difficult will GM's hard-to-solve dilemma be for its Chinese operations? General media companies in China have categorically denied the news that GM reportedly sold Chinese assets to raise funds last week. “At the same time, as we emphasized before, the development of GM’s business in China has not changed, and long-term investment plans and important projects are still going on.†The responsible person of GM China told this reporter.
The reporter also learned that GM is negotiating a joint venture with FAW Group to establish a commercial vehicle company. The name of the new company has been identified as "FAW-GM Commercial Vehicle Co., Ltd." and is currently awaiting approval from relevant government agencies. This is another heavy investment in China after GM's new production base in Shenyang last year, showing that GM continues to accelerate the search for development in the Chinese market.