McClatchy is reporting that President Obama will announce today that he will not approve additional bailout funds for either car company, saying that they have not yet gone far enough to ensure their long term viability. GM will get 60 days of operating capital to go back to the drawing board and Chrysler will get 30 days.
There are apparently two reports — one for each company — laying out the failures and the challenges:
The government laid out its case against the companies in two extraordinary documents that assessed their management structure, distribution systems, manufacturing capabilities and products — none of which drew much praise.
The government’s assessment of Chrysler’s prospects was particularly damning.
It noted that none of Chrysler’s current models were recommended in a recent article by Consumer Reports and that every one of its brands ranked in the lower quartile for quality in an assessment by J.D. Power.
It said the company is too dependent on its truck and SUV business and had only a 3 percent share of the small-car market, even though that segment makes up 21 percent of car sales overall. Noting that Chrysler’s strength is in trucks, SUVs and mini-vans, all vehicles with relatively low fuel efficiency, the government said it was unlikely Chrysler would be able to meet new government standards for fuel consumption.
GM, too, was criticized for being dependent on the sale of trucks and SUVs for its revenue.
The quality of its products also was a concern. While GM has worked hard to improve quality, “lingering consumer perception is that GM makes lower-quality cars . . . which in turn leads to greater discounting, which harms GM’s price realizations and depresses profitability.”
This report does not view the Volt as an adequate entry into the “green powertrain” market. Go read the whole thing. This is, of course, in advance of the official announcement so some caution is needed, but this is pretty detailed — and if McClatchy is right here, the Obama administration is really pushing these companies hard for some long term refocusing of their products and market focus.
Bonus Question: Why is it that the auto industry is getting this much restructuring attention and the banks are not?