General Motors has failed to motivate the government in incentivizing it’s takeover of Chrysler LLC owned by Cerberus Capital. The U.S. Treasury is not interested in funding the deal, which GM needs badly in order to survive and come up with the much needed funds to complete the takeover.

According to the White House, automakers should tap into the $25 billion allocated to the re-tooling of production lines, which has been available to them for quite some time. The $25 billion is to be used exclusively in order to make automotive production more fuel efficient. The U.S. Treasury does not want to begin a trend of bailing out businesses as it has been receiving bad press over it’s bailout of the financial industry.

General Motors in recent months has been losing $1 billion a month amidst a decline of sales. Future developments have been put on hold including the Suburban/Tahoe, Corvette, Malibu and Chevrolet Cruze models.

GMAC, the financial arm of General Motors is in the process of trying to change it’s commercial classification to become a bank in order to take advantage of the $250 billion bailout package, which has been allocated to the banking industry. Seems that is the only change GM has of taking over Chrysler in its entirety at this time and saving itself.

According to previous discussions even if GM does take over Chrysler, all but 7 models of Chrysler will be cancelled and about 50% of it’s current production plants will be shut down. Maybe it is best for Chrysler employees and the economy if this deal does not take place after all.

General Motors is reporting global sales of 2.1 million units for the third quarter, which is down 11% from the same period last year. Through September of this year, GM has sold 6.7 million cars and trucks worldwide, putting the automaker further behind Toyota, which has sold 7.05 million units so far this year. The struggling U.S. market is a big part of GM’s sales woes, as 61% of the Detroit automaker’s sales came from outside of its home market. That’s up from 56% last year, but down from the 65% figure for the second quarter of 2008. VP of sales and marketing Jonathan Browning points out challenges in the global financial markets as a big problem for GM, but also mentioned that strong sales in emerging markets is helping to ease the sales burden.

Since GM has a serious cash crunch and merger talks on its hands right now, it likely doesn’t care much about a global sales race with Toyota. That doesn’t make Toyota’s accomplishment any less significant, though, considering how long the General has been on top of the global sales charts.

General Motors Corp. reported this morning it sold more than 2.1 million vehicles globally during the third quarter, down 11.4 percent from last year.

Through September, GM sold 6.7 million vehicles compared with 7.051 million for Toyota, which expanded its lead in a bid to become the world’s largest automaker.

Sales outside the U.S. accounted for almost 61 percent of GM’s global sales, up from about 56 percent last year, but down from a record 65 percent during the second quarter.

GM blamed continued economic pressures in the U.S. and growing pressure in Europe for drops in two regions.

Sales in Europe fell 12.3 percent while sales in North America dropped 18.9 percent.

Mike DiGiovanni, GM’s executive director of global markets and industry analyst, said sagging consumer confidence as opposed to a lack of credit fueled the U.S. decline.

“Consumers have been hit by a three-fold blow to the head,” he said, citing a drop in housing prices, ongoing financial market turmoil and low consumer confidence.

Globally, only two brands posted sales increases during the third quarter. Sales of China-based Wuling brands rose 21.9 percent while Korea-based Daewoo climbed 4.7 percent.

Hardest hit was the Hummer brand, which GM is considering selling. Sales fell 54.6 percent, the steepest decline of any GM brand.

“The recent challenges in the global financial markets, including credit tightening and the drop in commodity prices, have negatively impacted market demand,” Jonathan Browning, vice president, global sales, service and marketing said in a statement this morning. “However, our sales performance shows that we are continuing to take advantage of new emerging market opportunities and are meeting customer needs with fuel efficient products that offer compelling design and great value.”

In the latest development of The Incomprehensible Union, General Motors is reportedly asking the U.S. government for $10 billion — on top of the $25 billion loan approved recently — to help it merge with Chrysler. The supplemental infusion would give the government, i.e. you and me, a stake in the merged company in the form of preferred stock, would see the government taking over pension obligations and provide a credit line for operations.

Read the rest of this entry »