General Motors files for bankruptcy

GENERAL MOTORS: Mideast operations unaffected by auto giant's decision to file for Chapter 11 bankruptcy in the US. (Getty Images)

As expected, General Motors Corp filed for bankruptcy on Monday, forcing the 100-year-old automaker into a new and uncertain era of US government ownership.

The bankruptcy filing - the third-largest in US history and the largest ever in US manufacturing - will not impact the company's Middle East operations however.

In a statement, General Motors' operations in the Middle East confirmed they are not part of GM's voluntary chapter 11 filing in the US to implement a '363' sale agreement.

General Motors in the Middle East, which operates under General Motors Overseas Distribution Corporation (GMODC), is a self-funded, profitable enterprise and will continue to conduct business normally through its dealer network, as it has done for over 80 years, the company said.

It added that it will continue to provide customers and dealers with cars and SUVs and that all current and future vehicle warranties will be honoured as normal.

Mike Devereux, President of General Motors in the Middle East, said: ''General Motors is wholly committed to the region. We continue to bring award-winning vehicles and through our dealers, provide customers with the best possible ownership experience.

''Our launch plans for this year are on track and unchanged.  We have already launched the Cadillac CTS-V, Cadillac Escalade Platinum, Chevrolet Traverse and GMC Sierra Denali. The Chevrolet Camaro will enter showrooms in July.  The Chevrolet Malibu and Cruze arrive in October as well as the all-new Cadillac SRX.  In December, the all-new GMC Terrain makes its Middle Eastern debut.
 
''In response to the challenging market conditions due to the global financial crisis, we worked closely with our dealers and financial institutions to launch trendsetting and innovative customer offers. We achieved our regional first quarter sales target and outperformed the market.

Devereux concluded: ''The New GM will be a lean, competitive, profitable and more customer-focussed enterprise. I am very confident about the opportunities for GM globally and look forward to continued success right here in the Middle East."

Meanwhile, under the Chapter 11 filing in the States GM will receive $30 billion from the Federal Government, with US taxpayers assuming a 60 percent stake in the company.

Describing the deal President Obama said the morphing of the ''old GM'' into the ''new GM'' requires ''a substantial amount of money that only a government can provide.''

Characterising the government as reluctant shareholders, the president was quick to clarify however that the government has no intention of interfering in the day-to-day running of GM's operations.

The New York Times reported that GM will cut 21,000 union jobs, close at least 12 factories and 40 percent of its 6,000 dealerships as part of the plan.

''GM did what Chrysler has successfully done - file for bankruptcy'' with support of the necessary parties, Obama said, adding that he would expect it would take more time for GM to emerge from bankruptcy than Chrysler because GM is bigger and more complex.

''I will not pretend the hard times are over,'' Obama said, and it will mean more job losses, and more closures at plant, dealerships and parts suppliers.''

But if the reorganisation goes well, the new GM can offer a new US generation ''the chance to live out their dreams,'' out-compete global automakers and be an integral part of the US economic future,'' the president added.

News of the GM reorganisation follows hard on the heels of Sunday's ruling by a bankruptcy judge approving the sale of substantially all of US automaker Chrysler's assets to a group led by Italy's Fiat SpA.

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READERS' COMMENTS

Good Work GM
Posted by Carmi, DUBAI, UAE on Wednesday 3 June 2009 at 15:38 UAE time


If the largest company in the world files for bankrupcy protection what is that saying for how great big corporations do business these days. So what if all the tens of thousands of people who did nothing wrong now find themselves with no jobs, no family businesses operating anymore. But all the guys up the top end of the ladder flying around in their private jets still have their lifestyle in all it's splendour and sparkle. What do they care just as long as life is hunky dory for them. Once again it's always the ones at the bottom end of the ladder to suffer the consequences of mismanagement and greed. We seems to be using that word quite a lot these days.

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