DETROIT (April 1, 2009) — General Motors Corp. might not wait 60 days to declare bankruptcy, the auto maker's new CEO Fritz Henderson said.
GM could head to bankruptcy court for a quick reorganization before June 1 if it can't make deep cuts fast enough to meet the Obama administration's mandate for a revised revitalization plan in 60 days, he said.
Mr. Henderson—who assumed his post March 30 after his boss, Rick Wagoner, was pushed out at the behest of the federal auto task force overseeing government loans—made it clear at a press conference yesterday that GM's preference is to stay out of bankruptcy court. But if necessary the company would “basically go in with a plan to get out” of bankruptcy quickly, he said, and the “task force has made it clear it will work with us.”
The U.S. Treasury's auto task force made it clear March 30 that it wants GM “to go deeper, go harder and go faster” with its restructuring plans, Mr. Henderson said.
'Total Confidence' program
Under GM's earlier restructuring plans, filed late last year, the company would keep four of its eight vehicle brands: Chevrolet, Cadillac, Buick and GMC, although Pontiac would remain as a niche nameplate with a much smaller lineup.
Mr. Henderson said GM is executing that plan and he said it was inappropriate to discuss whether some of those four core brands might not survive should GM enter bankruptcy court. News reports March 31 said the automotive task force favors GM keeping only two brands: Chevrolet and Cadillac.
In the interim, however, the marketer is looking to restore consumer confidence with its “Total Confidence Program,” in which GM will make payments of as much as $500 a month for as many as nine months should the buyer of a new GM model lose her income in the first 24 months of ownership.
The plan is similar to Hyundai's “Assurance” program, unveiled in January, which offers three months of payments for consumers in the same circumstances. Mark LaNeve, GM's vice president of vehicle sales, service and marketing in North America, said the car maker's offer comes on top of zero-percent financing and covers 2008 through 2010 models, and a buyer must make three payments to qualify for the program.
GM rolled out the program April 1 with TV spots on the CBS broadcast of the NCAA Final Four basketball tournament. The program will run through the end of April. “We'll extend it if it's successful,” Mr. LaNeve said.
Ford unveils similar plan
GM also will use the offer to hammer home its 100,000-mile vehicle warranty and free OnStar in-vehicle telematics system for a year.
Separately, Ford Motor Co. took the wraps off a similar program March 30, which it calls the “Ford Advantage Plan.” Starting March 31, Ford began covering payments of as much as $700 monthly for as many as 12 months on any new Ford, Lincoln or Mercury vehicle if customers lose their jobs. The auto maker is also offering zero-percent financing on select Ford, Lincoln and Mercury models through June 1.
“Consumers remain anxious about the economy and their own outlook for the future,” said Ken Czubay, vice president of sales and marketing. “We at Ford want to do our part to rebuild faith in the marketplace.”
This story was published in Advertising Age, a sister publication of Tire Business.