The bigger they are, the harder they fall

GM logo

The rumours and speculation have finally been fulfilled. General Motors, once the biggest car manufacturer in the world, has now filed for bankruptcy.

The good news for Australia’s Holden is that it will remain unaffected by the bankruptcy proceedings which only affect US operations. “Holden is a subsidiary of GM but we are a corporate entity in our own right – an independent company under Australian law,” Holden Chairman and Managing Director, Mark Reuss, said today. “Beyond that, GM has indicated that Holden will be an important part of the New GM.”

Mark Reuss will be holding a press conference at 9am this morning and that will be webcast on audio and video or audio only web portals. Holden has also released an FAQ statement.

A statement from GM Chairman Kent Kresa is shown below, and a full media statement from Holden can be read after the jump. For more check out GM’s Facts & Fiction website.

Kent Kresa: “The General Motors Board of Directors authorized the filing of a chapter 11 case with regret that this path proved necessary despite the best efforts of so many. Today marks a new beginning for General Motors. A court-supervised process and transfer of assets will enable a New GM to emerge as a stronger, healthier, more focused and nimbler company with a determination not to just survive but to excel. The Board concluded that the proposed transformation will maximize the value of the enterprise, and the return to the many stakeholders who have been involved with GM over the years.

We are appreciative of the support from the US Treasury, the President’s Task Force on Autos, the UAW and its members, salaried employees and retirees, concurring bondholders, and very importantly, the American taxpayers. The Board is confident that this New GM can operate successfully in the intensely competitive US market and around the world. The Board stands behind the people of GM in embracing this unique opportunity to create value and a new company that will design, engineer, build and market the best cars and trucks in world.”

Holden logo

Holden Operations Unchanged by Parent Company Announcements in the US

  • Holden to be part of New GM;
  • Holden not included in US filing under chapter 11;
  • No direct impact on local design, engineering and manufacturing operations;
  • Technology improvements to best-selling Commodore, introduction of second carline remain on track;
  • No changes to Holden employees and supplier payment arrangements; and
  • No changes to Holden dealer and warranty arrangements.

Holden will continue normal operations in Australia and New Zealand and does not expect changes to its business after General Motors announced it has taken court action in the US to launch a competitive New GM.

“Operations at Holden are unchanged in Australia and New Zealand and we expect it to remain that way,” Holden Chairman and Managing Director, Mark Reuss, said today.

“GM has clearly stated that all of its businesses in the Asia Pacific region – and that includes Holden – continue normal operations and are not directly impacted by this process in the US.

“No operations outside the US are included in the court filing or court supervised process.

“Holden is a subsidiary of GM but we are a corporate entity in our own right – an independent company under Australian law.

“Beyond that, GM has indicated that Holden will be an important part of the New GM.

“We intend to maintain our focus on Holden product programs and activities.

“That means technology improvements to our best selling Commodore range, launching the all-new Holden Cruze this month, and the introduction of our locally-built fuel efficient, four cylinder small car next year.

“We continue to run full operations at Elizabeth and Port Melbourne, producing cars for our 300-strong independent dealer network.

“We don’t anticipate this decision will have any direct impact on Holden’s workforce, dealers, or suppliers.

“Holden customer warranties are not affected and we continue to deliver the sales and service experience that our customers expect.

“We wouldn’t normally issue statements to highlight nothing has changed, but we appreciate that customers will naturally ask questions about this sort of announcement from the US.”

Mr Reuss said Holden would remain informed of developments in the US, a process which had been determined to reinvent General Motors.

“The process being used in the US is unlike Australian and New Zealand law. It is a fast, court supervised process that permits the sale of selected assets to a new entity,” Mr Reuss said.

“Unlike court-controlled processes in many other countries, US chapter 11 allows GM to deal with the financial issues that have built up over many years and for New GM to emerge as a healthier business, better able to deal with the challenges of today and tomorrow.

“It does not mean ceasing to trade.”

Pending approvals, the New GM is expected to launch in about 60 to 90 days as a separate and independent company from the current GM, with two distinct advantages: it will be built from only GM’s best brands and operations, and it will be supported by a stronger balance sheet due to a significantly lower debt burden and operating cost structure than before.

GM has previously indicated it is negotiating with prospective buyers for the Saab and Hummer brands. GM is working closely with dealers, including those in Australia and New Zealand, to continue delivering vehicles and maintaining aftersales and servicing requirements.

GM Group Vice President and President of GM Asia Pacific, Nick Reilly, said: “We believe this step – which was taken with the support of the US Government – is the most efficient and effective means for New GM to emerge with substantially less debt and lower operating costs, and with our operations positioned for long-term success.”

Holden customers with queries about this announcement can contact the Holden Customer Assistance Centre on 1800 033 349.

KEY FACTS – Holden

  • Holden employees more than 6000 people in Australia and New Zealand.
  • Holden spends $500 million annually on employee wages.
  • Last financial year Holden spent $420 million on research and development – more than any other private company in Australia.
  • The Holden Commodore has been Australia’s best-selling car since 1996.
  • Holden has produced more than 7 million vehicles since 1948.

KEY FACTS – GM

What GM Corporation’s US filing is:

  • An accelerated, court-supervised sale of GM’s strongest operations and brands to New GM, which is intended to be completed within about 60-90 days.
  • The most efficient and effective means to achieve the substantially lower debt and operating costs necessary to align the operation for future success.
  • Unlike court-controlled processes in many other countries, the US process being used by GM will allow it to continue trading and enable New GM to emerge as a leaner company with a stronger balance sheet.

What this US filing of GM Corporation is not:

This is not liquidation or a discontinuation of operations by General Motors.

This is not a proceeding similar to insolvency proceedings in Australia.

This does not mean New GM is going out of business or intends to pull out of Asia Pacific or any other region.

A GM statement can be read here.