General Motors 'will survive' June deadline - official

HERE TO STAY: General Motors is currently surviving on $15.4bn in bailout loans from the US government. (Getty Images)

General Motors (GM) is “here to stay”, its group vice president said Tuesday, as the clock ticks down to the June 1st deadline set by the Obama administration for the stricken car maker to prove it can restructure sufficiently.

Maureen Kempston Darkes, GM group vice president and president of GM Latin America, Africa and Middle East, said there was no doubt the car firm would survive the financial crash, regardless of the outcome from Washington.

“I want to say this right up front, General Motors is here to stay,” she told Arabian Business on the sidelines of a press briefing.

“GM will restructure its business and we will do it in court or out of court, and June 1st will decide that, but the result will be a leaner, stronger company.”

The troubled firm is prepared to do “whatever it takes” to rebuild its position, and views the Middle East and other emerging markets as a key fixture in its recovery, she said.

The firm currently has a 12 percent market share in the Middle East and sold 145,000 units last year.

 “I say to my Middle Eastern team, ‘Get ready for this turnaround because it’s going to be huge.’ We fully expect the markets to come back,” she said.

The car maker is currently surviving on $15.4bn in bailout loans from the US government and is desperately working to slash its employee count, and cut its dealership figures in a bid to reduce some $27bn of bond debt.

The firm is in talks to sell off its European operations, which include Opel in Germany and Saab in Sweden, and will announce a buyer for its Hummer division by the close of the quarter, Kempston Darkes said.

GM intends to lower its breakeven point to 10 million units a year, largely by streamlining its focus to four brands: Chevrolet, GMC, Cadillac and Buick.

However, its Mideast offices, which employ some 170 staff, will be untouched by the restructuring, said Kempston Darkes.

“These units are self funding, they’re self sustaining and will continue to be that way."

Analysts have said it is all but inevitable that the group will follow rival car maker Chrysler into bankruptcy.

GM has said that it must have 90 percent of its $27bn of outstanding bonds participate in an exchange, which will see the firm swap 225 shares of its common stock for every $1,000 in notes held by bondholders, or it will be forced to file for bankruptcy.

However, Kempston Darkes said fundamental differences between Chrysler and GM will keep the firm from taking the same path.

“Its the size for sure, and if you’re looking at the situation, the bond holders in GM are a very different group to those in Chrysler, a much bigger group and a lot more retail, just the scope of our operations.”

Asked if she had a message to US taxpayers, who are currently bankrolling GM’s operations, she said: “As the president said, there will be no taxpayer’s money unless we can create a viable General Motors and that’s what we’re doing.

“To taxpayers, I would tell them that GM is a company that will return to profitability and that will fully repay its loans.”

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READERS' COMMENTS

fact vs. bla bla bla ...
Posted by the Ulti, Dubai, UAE on Wednesday 20 May 2009 at 15:52 UAE time


Everybody in the streets knows what's going on, or at least has an idea. The crisis s still in its beginnings, and since it early effects, I have seen and touched the drop-down of the car market, beside other things, and the main company affected by this was GM. So, GM is here to stay, and I am here to watch how in God's name is that going to happen!!!

She would, wouldn't she ...
Posted by Geriant, Dubai, UAE on Wednesday 20 May 2009 at 08:29 UAE time


Nothing like a car salesperson to talk up a jalopy on its last legs. GM is in crisis and no amount of spin can hide the fact that the company simply didn't see this coming and never had a contingency plan. The Middle East is a tiny market (witness just 170 employees) so it is easy to sound positive when so little is at stake in the region. I doubt madam le car huckster would stand on a street corner in Detroit and say the same things as she purred to local compliant hacks, who no doubt had a nice lunch and a great giveaway. What was it this time, a keyring, a sports bag, a mobile phone, a Pontiac?

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