After only 39 days a new, leaner General Motors emerged from its bankruptcy reorganization on Friday, shedding $40 billion in debt, four brands, hundreds of dealerships and thousands of jobs. GM’s old stock is still trading, but is effectively worthless. Stock in the new GM may be issued next year and the Obama administration’s automotive task force favors a quick sale of its 61% stake when the new stock is issued.
The head of the White House automotive task force, Steve Rattner, implied that he wants both Chrysler and GM to function as independent companies. “We’re here to get the government out of the auto business in any respect…even as relatively passive shareholders…as quickly as practicable.”
The best news for the new GM is that Bob Lutz, GM’s outspoken and high-profile product chief, has agreed to stay on in a new position, reversing an earlier plan to retire at the end of 2009. Lutz is 77 years old, and will be vice chairman responsible for all creative elements of new products and customer relationships. This is an important development because Lutz has spent the past several years remaking GM’s model line and is responsible for many of GM’s most successful brands, such as Cadillac.
GM started the year with 91,000 employees, but will end the year with only about 64,000. After shedding nearly one-third of its models, GM’s CEO Fritz Henderson said the new GM would launch 10 new products in the U.S. over the next 18 months, as well another 17 overseas. After trimming its dealer network, GM is also testing a new online auction buying system on eBay, which I suspect its remaining dealers are cooperating with in an attempt to ensure that GM can avoid being burdened by excessive inventories of unsold vehicles.
Many of GM’s unwanted assets will remain in Chapter 11 to be sold off for the benefit of creditors over several years. The Obama administration has insisted it will not interfere in GM’s day-to-day operations, however critics of government involvement have expressed fears that political considerations will be brought to bear on many future decisions. But however you slice it, the quicker-than-expected reorganization for GM is good news and could be a major accomplishment for the Obama administration if it continues to go well.