DETROIT — According to a source at General Motors, the company will announce next Monday its new "faster, deeper" reorganization plan, which will likely include a death sentence for the Pontiac brand.
Inside Line called Tom Wilkinson, news relations PR man for General Motors, who said: "There's nothing I can share with you at this time. Keep your eyes on our media site. Officially, nothing has changed with Pontiac's niche-brand status, until you hear differently."
The one-time "Excitement" division and creator of legends such as the GTO and Firebird was relegated to "niche" or "specialty" brand status by General Motors in its first viability plan in December of last year.
The company toyed with competing proposals to either turn the brand into GM's version of Scion or to make Pontiac a very focused purveyor of performance cars based around the critically well-received G8. But ultimately, Pontiac was chosen as the easiest to kill since it was cut from GM's self-defined herd of four "core brands," Chevrolet, Cadillac, GMC and Buick. Most Pontiac franchises have already been combined with Buick and GMC.
If true, Pontiac will join Saab, Saturn and Hummer as brands that will not survive GM's current troubles — at least not as a component of General Motors.
Inside Line says: Just as the G8 reawakened our interest in 83-year-old Pontiac, the brand falls victim to bad times and old mistakes. — Daniel Pund, Senior Editor, Detroit
Monday, April 27, 2009
GM prepares to announce Pontiac closure
General Motors is preparing to announce early next week that the Pontiac brand will be eliminated, said a source familiar with the company's plans.
The announcement will be made as part of an updated viability report to the U.S. auto task force, the source said. A second source indicated earlier this week that GM, surviving with $15.4 billion in U.S. bailout funds, was considering phasing out Pontiac instead of sticking with a plan to have it continue as a niche brand.
In its proposal to the U.S. Treasury on Feb. 17, GM said Cadillac, Chevrolet, Buick and GMC would be its four core U.S. brands. On March 31, the task force told GM that its restructuring plan wasn't aggressive enough and denied a request for $16.6 billion in additional aid.
Pontiac spokesman Jim Hopson declined to comment on Pontiac's future.
"I can't speculate what next week is going to hold," he said. "When we were asked to go back and look at the viability plan, everything went back on the table. We're reviewing everything. Nothing is sacred. We're still under the original viability plan until told otherwise."
The U.S. today granted $2 billion to keep GM operating while it prepares for a new, June 1 restructuring deadline. GM has been staying afloat with $13.4 billion in U.S. loans granted in December by President George W. Bush.
Bloomberg News said GM is expected to tell the government that it will stick with plans to keep GMC, Buick, Chevrolet and Cadillac.
Saab, Hummer and Saturn are for sale.
Muscle-car icon
Pontiac, which launched the 1960s U.S. muscle-car era with the GTO, sold 267,348 vehicles in the United States last year, less than a third of its 1978 peak of 896,980. This year's volume dropped 43.5 percent through March as industrywide demand fell 38.4 percent.
"Pontiac is one of my favorites -- I especially like the G8," said John Pitre, general manager of Motor City Auto Center in Bakersfield, Calif., which sells Buick-Pontiac-GMC and Saturn. "I would be sad to see it phased out. However, if some of those products became part of the Buick brand, I could understand GM's logic."
Chris Haydocy, who owns a Buick-Pontiac-GMC store in Columbus, Ohio, said Pontiac isn't essential as long as the revamped sales channel provides most of what customers are looking for.
Said Haydocy: "I think you need 10 or 12 models to do that."
Killing Pontiac would make sense, said George Peterson, president of marketing and product consulting firm AutoPacific Inc.
"It's sort of a shadow of itself," he said. "All of the Pontiacs, except for the G8, are copies of Chevrolets or GMCs, so there really isn't any reason to keep Pontiac around.''
GM introduced Pontiac in 1926. GM decided to kill Oldsmobile in 2000, three years after its 100th anniversary.
The announcement will be made as part of an updated viability report to the U.S. auto task force, the source said. A second source indicated earlier this week that GM, surviving with $15.4 billion in U.S. bailout funds, was considering phasing out Pontiac instead of sticking with a plan to have it continue as a niche brand.
In its proposal to the U.S. Treasury on Feb. 17, GM said Cadillac, Chevrolet, Buick and GMC would be its four core U.S. brands. On March 31, the task force told GM that its restructuring plan wasn't aggressive enough and denied a request for $16.6 billion in additional aid.
Pontiac spokesman Jim Hopson declined to comment on Pontiac's future.
"I can't speculate what next week is going to hold," he said. "When we were asked to go back and look at the viability plan, everything went back on the table. We're reviewing everything. Nothing is sacred. We're still under the original viability plan until told otherwise."
The U.S. today granted $2 billion to keep GM operating while it prepares for a new, June 1 restructuring deadline. GM has been staying afloat with $13.4 billion in U.S. loans granted in December by President George W. Bush.
Bloomberg News said GM is expected to tell the government that it will stick with plans to keep GMC, Buick, Chevrolet and Cadillac.
Saab, Hummer and Saturn are for sale.
Muscle-car icon
Pontiac, which launched the 1960s U.S. muscle-car era with the GTO, sold 267,348 vehicles in the United States last year, less than a third of its 1978 peak of 896,980. This year's volume dropped 43.5 percent through March as industrywide demand fell 38.4 percent.
"Pontiac is one of my favorites -- I especially like the G8," said John Pitre, general manager of Motor City Auto Center in Bakersfield, Calif., which sells Buick-Pontiac-GMC and Saturn. "I would be sad to see it phased out. However, if some of those products became part of the Buick brand, I could understand GM's logic."
Chris Haydocy, who owns a Buick-Pontiac-GMC store in Columbus, Ohio, said Pontiac isn't essential as long as the revamped sales channel provides most of what customers are looking for.
Said Haydocy: "I think you need 10 or 12 models to do that."
Killing Pontiac would make sense, said George Peterson, president of marketing and product consulting firm AutoPacific Inc.
"It's sort of a shadow of itself," he said. "All of the Pontiacs, except for the G8, are copies of Chevrolets or GMCs, so there really isn't any reason to keep Pontiac around.''
GM introduced Pontiac in 1926. GM decided to kill Oldsmobile in 2000, three years after its 100th anniversary.
GM dealerships will be cut by half; Pontiac will be phased out by 2010
General Motors, speeding up its overhaul in a bid to survive, plans to shed half of its 6,200 U.S. dealerships by 2014 and phase out its Pontiac brand by next year.
The dealership reduction, from 6,246 at the end of last year, marks a sharper decline than forecast on Feb. 17, when the count was projected to fall by 34 percent.
GM's revised viability proposal submitted to the U.S. government today also said the automaker will offer stock to debt holders to reduce its crushing debt load.
GM said it will file for bankruptcy unless a sufficient number of debt holders agree to take stock before a government-imposed deadline of June 1. The company estimates that the swap must cover at least 90 percent of its unsecured debt to satisfy the Treasury Department.
"The objective here is not to survive; the objective is to develop an operating plan that allows us to win," said CEO Fritz Henderson, who took over from the ousted Rick Wagoner a month ago when the U.S. auto task force rejected GM's Feb. 17 plan as too tame.
GM, surviving on $15.4 billion in U.S. loans and seeking to double that amount, cautioned that it will be up to Treasury to decide whether enough debt had been exchanged. If the swap is successful, bondholders will own about 10 percent of GM.
Should GM file for court protection, it may sell most of its assets into a "New GM," under section 363 of the U.S. Bankruptcy Code. Under this so-called Good GM/Bad GM plan, assets that don't become part of New GM would be liquidated.
Brand strategy
The automaker will continue to invest in four core U.S. brands: Chevrolet, Cadillac, Buick and GMC. In its earlier strategy, Pontiac was to have continued as a niche marque.
The company also said that it is accelerating plans to spin off, sell or close Hummer, Saturn and Saab. Their futures will be resolved this year. In the previous, Feb. 17 restructuring plan, rejected by the Obama administration's auto task force, GM planned to determine the brands' fates before 2011.
GM said it has received final bids from potential buyers of Hummer. The company expects to make a final decision on Hummer's sale or phase-out in early May. Proposals to sell Saturn's distribution operations are being reviewed.
In citing risk factors, GM said former parts unit Delphi Corp. is unlikely to emerge from almost four years of bankruptcy "in the near-term without government support and possibly may not emerge at all."
Cut, cut, cut
GM also lowered its projections for North American production after the auto task force judged the previous expectations too optimistic.
GM forecasts production of 3.7 million vehicles in 2014, down from 4.1 million in the Feb. 17 plan.
The automaker expects to offer 34 U.S. nameplates in 2010, down from 48 last year. Marketing support will be "competitive," GM said. From 2010 through 2014, only one nameplate will be added.
GM also plans to shut more U.S. factories than proposed earlier. GM says it will have 34 powertrain, stamping and assembly plants by the end of next year, down from 37 in the February plan.
The number of U.S. hourly workers will also be significantly reduced. GM says it will have 40,000 hourly workers in 2010, down from 47,000 in the Feb. 17 plan and 61,000 in 2008.
Reduced employment, wage rates and other changes will further reduce GM North America's structural costs. The new plan says they will fall from $30.8 billion in 2008 to $22.3 billion in 2011. In the Feb. 17 plan, structural costs in 2011 were to be $24.0 billion.
The automaker, which hasn't posted a profit since 2004, said the lower structural costs will enable it to break even at a U.S. sales volume of 10 million vehicles.
Through 2008, the average U.S. annual sales total this decade was 16.4 million. The industry's seasonally adjusted annual rate through March of this year: 9.3 million.
Said Henderson: "Our objective is to make this a defining moment for the corporation."
The dealership reduction, from 6,246 at the end of last year, marks a sharper decline than forecast on Feb. 17, when the count was projected to fall by 34 percent.
GM's revised viability proposal submitted to the U.S. government today also said the automaker will offer stock to debt holders to reduce its crushing debt load.
GM said it will file for bankruptcy unless a sufficient number of debt holders agree to take stock before a government-imposed deadline of June 1. The company estimates that the swap must cover at least 90 percent of its unsecured debt to satisfy the Treasury Department.
"The objective here is not to survive; the objective is to develop an operating plan that allows us to win," said CEO Fritz Henderson, who took over from the ousted Rick Wagoner a month ago when the U.S. auto task force rejected GM's Feb. 17 plan as too tame.
GM, surviving on $15.4 billion in U.S. loans and seeking to double that amount, cautioned that it will be up to Treasury to decide whether enough debt had been exchanged. If the swap is successful, bondholders will own about 10 percent of GM.
Should GM file for court protection, it may sell most of its assets into a "New GM," under section 363 of the U.S. Bankruptcy Code. Under this so-called Good GM/Bad GM plan, assets that don't become part of New GM would be liquidated.
Brand strategy
The automaker will continue to invest in four core U.S. brands: Chevrolet, Cadillac, Buick and GMC. In its earlier strategy, Pontiac was to have continued as a niche marque.
The company also said that it is accelerating plans to spin off, sell or close Hummer, Saturn and Saab. Their futures will be resolved this year. In the previous, Feb. 17 restructuring plan, rejected by the Obama administration's auto task force, GM planned to determine the brands' fates before 2011.
GM said it has received final bids from potential buyers of Hummer. The company expects to make a final decision on Hummer's sale or phase-out in early May. Proposals to sell Saturn's distribution operations are being reviewed.
In citing risk factors, GM said former parts unit Delphi Corp. is unlikely to emerge from almost four years of bankruptcy "in the near-term without government support and possibly may not emerge at all."
Cut, cut, cut
GM also lowered its projections for North American production after the auto task force judged the previous expectations too optimistic.
GM forecasts production of 3.7 million vehicles in 2014, down from 4.1 million in the Feb. 17 plan.
The automaker expects to offer 34 U.S. nameplates in 2010, down from 48 last year. Marketing support will be "competitive," GM said. From 2010 through 2014, only one nameplate will be added.
GM also plans to shut more U.S. factories than proposed earlier. GM says it will have 34 powertrain, stamping and assembly plants by the end of next year, down from 37 in the February plan.
The number of U.S. hourly workers will also be significantly reduced. GM says it will have 40,000 hourly workers in 2010, down from 47,000 in the Feb. 17 plan and 61,000 in 2008.
Reduced employment, wage rates and other changes will further reduce GM North America's structural costs. The new plan says they will fall from $30.8 billion in 2008 to $22.3 billion in 2011. In the Feb. 17 plan, structural costs in 2011 were to be $24.0 billion.
The automaker, which hasn't posted a profit since 2004, said the lower structural costs will enable it to break even at a U.S. sales volume of 10 million vehicles.
Through 2008, the average U.S. annual sales total this decade was 16.4 million. The industry's seasonally adjusted annual rate through March of this year: 9.3 million.
Said Henderson: "Our objective is to make this a defining moment for the corporation."
GM accelerates Saturn shutdown to this year. No plans to rebadge Pontiac models.
General Motors plans to build the last Saturn vehicles this year, two years earlier than first envisioned, as it speeds up efforts to shed dealerships and divisions, CEO Fritz Henderson said today.
The Saturn brand still may survive if GM can sell it to another automaker or investor, but GM no longer will build vehicles for Saturn after the 2009 model year, Henderson said on a conference call.
In its Feb. 17 plan submitted to the U.S. auto task force, GM planned to build Saturn vehicles through 2011. Under a revised plan announced today, GM will shed Pontiac next year, leaving the automaker with just four U.S. brands: Chevrolet, Cadillac GMC and Buick.
Henderson also said that GM no longer will build Hummer vehicles after the current model year.
No Pontiacs rebadged
No Pontiacs will be rebadged as Chevrolets, he said. The new G8 sports sedan will be dropped as will the Solstice sports car. Henderson said the Pontiac Vibe could be built into 2010, pending negotiations with manufacturing partner Toyota Motor Corp., which assembles the Toyota Corolla at a joint venture plant in California.
GM has begun talks to sell Saturn to a private equity group working with Saturn dealers.
"If a sale of Saturn does not occur, we intend to phase out the Saturn brand by the end of 2009," GM said in its government filing today.
"As a result, our current Viability Plan does not comprehend production and sales to dealers of Saturn products beyond 2009."
Earlier this month, an investor group called Telesto Ventures said it wants to acquire Saturn's retail operations and provide dealers with vehicles from GM through 2011 and from mostly overseas manufacturers thereafter. A GM spokesman called the group's proposal legitimate and "very interesting." He said there also were other parties interested in Saturn.
A Telesto spokesman said his group was in discussions with several unidentified foreign manufacturers.
He said Telesto, which was formed specifically for the Saturn venture, encompasses a private equity firm, Black Oak Partners LLC, of Oklahoma City, and several other investors. It's unclear how much money is backing Telesto and what automotive experience it has.
Dealer reaction
John Danielson, sales manager at Saturn of the Lakes north of Orlando, Fla., said he has 100 new Saturns in stock. The store sold only eight new Saturns last month. Monday's announcement confirmed a rumor Danielson said he heard last week.
"Business is very tough right now. Our new and used is down 50 percent over last year," said Danielson. Some deals for new cars that have not yet been delivered are now in danger of falling through because of GM's announcement Monday that no new Saturns will be built after the 2009 model year.
Danielson, who worked at the store when it was an Oldsmobile dealership, said he expects GM to come out with new incentives to persuade customers to buy the final models.
The Saturn brand still may survive if GM can sell it to another automaker or investor, but GM no longer will build vehicles for Saturn after the 2009 model year, Henderson said on a conference call.
In its Feb. 17 plan submitted to the U.S. auto task force, GM planned to build Saturn vehicles through 2011. Under a revised plan announced today, GM will shed Pontiac next year, leaving the automaker with just four U.S. brands: Chevrolet, Cadillac GMC and Buick.
Henderson also said that GM no longer will build Hummer vehicles after the current model year.
No Pontiacs rebadged
No Pontiacs will be rebadged as Chevrolets, he said. The new G8 sports sedan will be dropped as will the Solstice sports car. Henderson said the Pontiac Vibe could be built into 2010, pending negotiations with manufacturing partner Toyota Motor Corp., which assembles the Toyota Corolla at a joint venture plant in California.
GM has begun talks to sell Saturn to a private equity group working with Saturn dealers.
"If a sale of Saturn does not occur, we intend to phase out the Saturn brand by the end of 2009," GM said in its government filing today.
"As a result, our current Viability Plan does not comprehend production and sales to dealers of Saturn products beyond 2009."
Earlier this month, an investor group called Telesto Ventures said it wants to acquire Saturn's retail operations and provide dealers with vehicles from GM through 2011 and from mostly overseas manufacturers thereafter. A GM spokesman called the group's proposal legitimate and "very interesting." He said there also were other parties interested in Saturn.
A Telesto spokesman said his group was in discussions with several unidentified foreign manufacturers.
He said Telesto, which was formed specifically for the Saturn venture, encompasses a private equity firm, Black Oak Partners LLC, of Oklahoma City, and several other investors. It's unclear how much money is backing Telesto and what automotive experience it has.
Dealer reaction
John Danielson, sales manager at Saturn of the Lakes north of Orlando, Fla., said he has 100 new Saturns in stock. The store sold only eight new Saturns last month. Monday's announcement confirmed a rumor Danielson said he heard last week.
"Business is very tough right now. Our new and used is down 50 percent over last year," said Danielson. Some deals for new cars that have not yet been delivered are now in danger of falling through because of GM's announcement Monday that no new Saturns will be built after the 2009 model year.
Danielson, who worked at the store when it was an Oldsmobile dealership, said he expects GM to come out with new incentives to persuade customers to buy the final models.
Tuesday, April 21, 2009
Ford shows off 2010 Fusion Hybrid
Ford Motor showed off its new 2010 Ford Fusion Hybrid at a media event in Seattle.
The gas-electric midsize car, rated at 41 mpg in city driving, is just hitting the market.
The car sports SmartGauge technology, which includes dashboard readouts that Ford says “coaches” a driver on gas mileage. Among other things, the gauge shows a plant cluster — leaves are added when the car’s fuel efficiency increases and drop as the efficiency declines.
To see the video visit:
http://www.mixedpower.com/ford-fusion/ford-shows-off-2010-fusion-hybrid-with-video/
The gas-electric midsize car, rated at 41 mpg in city driving, is just hitting the market.
The car sports SmartGauge technology, which includes dashboard readouts that Ford says “coaches” a driver on gas mileage. Among other things, the gauge shows a plant cluster — leaves are added when the car’s fuel efficiency increases and drop as the efficiency declines.
To see the video visit:
http://www.mixedpower.com/ford-fusion/ford-shows-off-2010-fusion-hybrid-with-video/
Ford Compares EcoBoost Engine to Competition’s V8s
Since the EcoBoost engine was first introduced, Ford has been working tirelessly to make it as powerful and fuel efficient as possible. This is, of course, due mainly to the EcoBoost drivetrain being the staple of Ford's long term plan to increase sales. The real question is, how well will the new engine do when compared to the competition? Ford recently released a side-by-side comparison that should help answer that question.
Assuming all of these figures are accurate, it is very clear that the EcoBoost engine will provide a substantial amount of power for its size, being beaten only by the BMW 550i. In terms of fuel economy it is at the top of the list, achieving 25mpg on the highway.
Ford is planning on scaling up production and availability of the EcoBoost drivetrain over the next several years. By 2013 they are planning on offering the EcoBoost as an option in at least 90% of all vehicles, including the F-150 by 2010.
The engineers are also planning on introducing a few new EcoBoost engines, smaller in size, to better fit specific vehicles.
The engine Ford was using for the testing was the standard 3.5 liter EcoBoost V6 that will eventually make its way into the Lincoln MKS and several other models that are currently using larger V6 or V8 engines.
Assuming all of these figures are accurate, it is very clear that the EcoBoost engine will provide a substantial amount of power for its size, being beaten only by the BMW 550i. In terms of fuel economy it is at the top of the list, achieving 25mpg on the highway.
Ford is planning on scaling up production and availability of the EcoBoost drivetrain over the next several years. By 2013 they are planning on offering the EcoBoost as an option in at least 90% of all vehicles, including the F-150 by 2010.
The engineers are also planning on introducing a few new EcoBoost engines, smaller in size, to better fit specific vehicles.
The engine Ford was using for the testing was the standard 3.5 liter EcoBoost V6 that will eventually make its way into the Lincoln MKS and several other models that are currently using larger V6 or V8 engines.
Monday, April 20, 2009
Ford Plans Supplier Aid to Curb GM, Chrysler Bankruptcy Fallout
April 8 (Bloomberg) -- Ford Motor Co., the only U.S. automaker to forgo federal aid, is lending money to partsmakers as it moves to shield itself from any fallout in potential bankruptcies at General Motors Corp. and Chrysler LLC.
"Where a supplier needs some financial assistance, we'll do so where it makes sense for us," Ford's Americas chief, Mark Fields, said in a Bloomberg Television interview today. A new labor agreement that saves $500 million annually also will act as a buffer, Fields said.
Girding for a competitor's bankruptcy follows through on Chief Executive Officer Alan Mulally's Dec. 5 assertion to Congress that the second-largest U.S. automaker might be dragged into court protection should GM or Chrysler go first and trigger a cascade of supplier failures.
"We share our supply base a lot with not only Chrysler and General Motors, but the other imports," Fields said at the New York International Auto Show. "If there's a significant industry event, we want to make sure that it's not uncontrolled because if it is, it's going to affect our production."
Ford, which lost a record $14.7 billion last year, is attracting buyers concerned about bankruptcy at GM and Chrysler, Fields said.
Adding Market Share
"We're the only manufacturer that's actually grown their retail market share for two quarters in a row," Fields said. "Our dealers are telling us that consumers are coming into their showrooms across the country and saying, 'You know what? We may not have as much confidence in purchasing another brand, and gee, we're glad that Ford is in a different position.'"
President Barack Obama has given GM until June 1 to come up with a viability plan and Chrysler until April 30 to form an alliance with Italy's Fiat SpA, or each will lose the U.S. loans keeping them alive and face bankruptcy.
While Ford hasn't sought support, it is the only U.S. automaker to meet the terms of the U.S. Treasury Department's aid program, which requires companies to slash debt and get labor costs competitive with those of non-U.S. carmakers.
Ford said April 6 it trimmed its debt by $9.9 billion. On March 9, the Dearborn, Michigan-company said it reached a union deal to match Toyota Motor Corp.'s labor costs by 2011.
"Where a supplier needs some financial assistance, we'll do so where it makes sense for us," Ford's Americas chief, Mark Fields, said in a Bloomberg Television interview today. A new labor agreement that saves $500 million annually also will act as a buffer, Fields said.
Girding for a competitor's bankruptcy follows through on Chief Executive Officer Alan Mulally's Dec. 5 assertion to Congress that the second-largest U.S. automaker might be dragged into court protection should GM or Chrysler go first and trigger a cascade of supplier failures.
"We share our supply base a lot with not only Chrysler and General Motors, but the other imports," Fields said at the New York International Auto Show. "If there's a significant industry event, we want to make sure that it's not uncontrolled because if it is, it's going to affect our production."
Ford, which lost a record $14.7 billion last year, is attracting buyers concerned about bankruptcy at GM and Chrysler, Fields said.
Adding Market Share
"We're the only manufacturer that's actually grown their retail market share for two quarters in a row," Fields said. "Our dealers are telling us that consumers are coming into their showrooms across the country and saying, 'You know what? We may not have as much confidence in purchasing another brand, and gee, we're glad that Ford is in a different position.'"
President Barack Obama has given GM until June 1 to come up with a viability plan and Chrysler until April 30 to form an alliance with Italy's Fiat SpA, or each will lose the U.S. loans keeping them alive and face bankruptcy.
While Ford hasn't sought support, it is the only U.S. automaker to meet the terms of the U.S. Treasury Department's aid program, which requires companies to slash debt and get labor costs competitive with those of non-U.S. carmakers.
Ford said April 6 it trimmed its debt by $9.9 billion. On March 9, the Dearborn, Michigan-company said it reached a union deal to match Toyota Motor Corp.'s labor costs by 2011.
Tuesday, April 7, 2009
Ford Motor Cuts Its Automotive Debt by $9.9 Billion
In total, Ford and Ford Credit will use $2.4 billion in cash plus 468 million shares of Ford common stock to reduce Ford’s outstanding Automotive debt by $9.9 billion from $25.8 billion at Dec. 31, 2008. This will reduce Ford’s annual cash interest expense by more than $500 million based on current interest rates.
This successful debt restructuring, together with previously announced agreements with the United Auto Workers, will substantially strengthen Ford’s balance sheet.
Approximately $4.3 billion principal amount of Ford Motor Company’s 4.25% Senior Convertible Notes due December 15, 2036 were validly tendered and accepted for purchase pursuant to Ford’s conversion offer. Ford will use $344 million to pay a cash premium to convertible note holders who validly tendered.
Ford Motor Credit Company today separately announced the final results of its previously announced $1.3 billion cash tender offer for Ford’s unsecured, non-convertible debt securities. Based on the tenders received, Ford Credit will use $1.1billion in cash to purchase $3.4 billion principal amount of Ford’s unsecured notes.
As previously announced, Ford Credit used $1 billion to purchase $2.2 billion principal amount of Ford’s term loan debt at a price of 47 percent of par.
DEARBORN, Mich., April 6, 2009 – Ford Motor Company (NYSE: F) announced today the successful completion of debt restructuring initiatives that will reduce Ford’s Automotive debt by $9.9 billion from $25.8 billion at December 31, 2008, and lower Ford’s annual cash interest expense by more than $500 million based on current interest rates.
“By substantially reducing our debt, Ford is taking another step toward creating an exciting, viable enterprise,” said Ford President and CEO Alan Mulally. “As with our recent agreements with the UAW, Ford continues to lead the industry in taking the decisive actions necessary to weather the current downturn and deliver long-term profitable growth.”
Previously Announced Debt Restructuring Initiatives
On March 4, 2009, Ford and Ford Credit announced the major components of a comprehensive debt restructuring: (1) a conversion offer in which Ford offered to pay a premium in cash to induce the holders of any and all of the $4.88 billion principal amount outstanding of its 4.25% Senior Convertible Notes due December 15, 2036 (the “Convertible Notes”) to convert the Convertible Notes into shares of Ford’s common stock (the “Conversion Offer”); (2) a $500 million cash tender offer by Ford Credit (the “Term Loan Offer”) for Ford’s senior secured term loan debt (the “Term Loan Debt”); and (3) a $1.3 billion cash tender offer (the “Notes Tender Offer”) by Ford Credit for certain of Ford’s unsecured, non-convertible debt securities (the “Notes”).
Results of Conversion Offer
The Conversion Offer expired at 9:00 a.m., New York City time, on April 3, 2009 (the “Expiration Date”). As of the Expiration Date, approximately $4.3 billion principal amount of Convertible Notes were validly tendered and accepted for purchase, according to information provided by Computershare, Inc., the Exchange Agent with respect to the Conversion Offer. This will result in the issuance of an aggregate of approximately 468 million shares of Ford’s common stock and the payment of an aggregate of $344 million in cash ($80 in cash per $1,000 principal amount of Convertible Notes converted), plus the applicable accrued and unpaid interest on such Convertible Notes, on the expected settlement date of April 8, 2009. Upon settlement of the Conversion Offer, approximately $579 million aggregate principal amount of Convertible Notes will remain outstanding.
Holders who validly tendered and did not withdraw their Convertible Notes by 9:00 a.m., New York City time, on the Expiration Date and whose Convertible Notes were accepted for purchase will receive, for each $1,000 principal amount of the Convertible Notes converted, 108.6957 shares of Ford’s common stock plus $80 in cash and the applicable accrued and unpaid interest.
Previously Announced Results of Term Loan Offer
On March 23, 2009, Ford Credit announced that the Term Loan Offer, which expired at 5:00 p.m., New York City time, on March 19, 2009, had been over-subscribed. Based on the tenders received, Ford Credit increased the amount of cash used from $500 million to $1 billion to purchase $2.2 billion principal amount of Ford’s Term Loan Debt at a price of 47 percent of par. This transaction settled on March 27, 2009, following which Ford Credit distributed the Term Loan Debt to its immediate parent, Ford Holdings LLC. The distribution of the Term Loan Debt is consistent with Ford Credit’s previously announced plans to pay distributions to Ford of about $2 billion through 2010.
Approximately $4.6 billion aggregate principal amount of Term Loan Debt remains outstanding.
Results of Notes Tender Offer
Concurrent with this announcement, Ford Credit separately announced today by press release the results of its previously announced $1.3 billion cash tender offer for Ford’s unsecured, non-convertible debt securities. As of the April 3, 2009 expiration date of the Notes Tender Offer, approximately $3.4 billion principal amount of Notes were validly tendered and accepted for purchase, according to information provided by Global Bondholder Services Corporation, the Depositary and Information Agent with respect to the Notes Tender Offer. This will result in an aggregate purchase price for the Notes of approximately $1.1 billion, to be paid by Ford Credit on the expected settlement date of April 8, 2009. Upon settlement of the Notes Tender Offer, such Notes will be transferred from Ford Credit to Ford in satisfaction of certain of Ford Credit’s tax liabilities to Ford. After settlement of the Notes Tender Offer, approximately $5.5 billion aggregate principal amount of the Notes will remain outstanding.
In addition, as Ford previously announced, it has elected to defer future interest payments related to the 6.50% Cumulative Convertible Trust Preferred Securities of Ford Motor Company Capital Trust II (the “Trust Preferred Securities”), which will result in the deferral of $184 million in interest on the Trust Preferred Securities annually.
About Ford Motor Company
Ford Motor Company, a global automotive industry leader based in Dearborn, Mich., manufactures or distributes automobiles across six continents. With about 213,000 employees and about 90 plants worldwide, the company’s brands include Ford, Lincoln, Mercury and Volvo. The company provides financial services through Ford Motor Credit Company. For more information regarding Ford’s products, please visit www.ford.com.
About Ford Motor Credit Company
Ford Motor Credit Company LLC is one of the world’s largest automotive finance companies and has supported the sale of Ford Motor Company products since 1959. It is an indirect, wholly owned subsidiary of Ford. It provides automotive financing for Ford, Lincoln, Mercury and Volvo dealers and customers. More information can be found at www.fordcredit.com and at Ford Motor Credit’s investor center, www.fordcredit.com/investorcenter.
Safe Harbor and Other Required Disclosure
This news release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are based on expectations, forecasts, and assumptions by the management of Ford and involve a number of risks, uncertainties, and other factors that could cause actual results to differ materially from those stated, including, without limitation, those set forth in “Item 1A—Risk Factors” and “Item 7 —Management’s Discussion and Analysis of Financial Condition and Results of Operations —Risk Factors” of Ford’s Annual Report on Form 10-K for the year ended December 31, 2008. Readers are encouraged to read Ford’s filings with the Securities and Exchange Commission to learn more about the risk factors associated with Ford’s businesses.
Ford cannot be certain that any expectations, forecasts, or assumptions made by management in preparing these forward-looking statements will prove accurate, or that any projections will be realized. It is to be expected that there may be differences between projected and actual results. Our forward-looking statements speak only as of the date of their initial issuance, and we do not undertake any obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events, or otherwise.
This successful debt restructuring, together with previously announced agreements with the United Auto Workers, will substantially strengthen Ford’s balance sheet.
Approximately $4.3 billion principal amount of Ford Motor Company’s 4.25% Senior Convertible Notes due December 15, 2036 were validly tendered and accepted for purchase pursuant to Ford’s conversion offer. Ford will use $344 million to pay a cash premium to convertible note holders who validly tendered.
Ford Motor Credit Company today separately announced the final results of its previously announced $1.3 billion cash tender offer for Ford’s unsecured, non-convertible debt securities. Based on the tenders received, Ford Credit will use $1.1billion in cash to purchase $3.4 billion principal amount of Ford’s unsecured notes.
As previously announced, Ford Credit used $1 billion to purchase $2.2 billion principal amount of Ford’s term loan debt at a price of 47 percent of par.
DEARBORN, Mich., April 6, 2009 – Ford Motor Company (NYSE: F) announced today the successful completion of debt restructuring initiatives that will reduce Ford’s Automotive debt by $9.9 billion from $25.8 billion at December 31, 2008, and lower Ford’s annual cash interest expense by more than $500 million based on current interest rates.
“By substantially reducing our debt, Ford is taking another step toward creating an exciting, viable enterprise,” said Ford President and CEO Alan Mulally. “As with our recent agreements with the UAW, Ford continues to lead the industry in taking the decisive actions necessary to weather the current downturn and deliver long-term profitable growth.”
Previously Announced Debt Restructuring Initiatives
On March 4, 2009, Ford and Ford Credit announced the major components of a comprehensive debt restructuring: (1) a conversion offer in which Ford offered to pay a premium in cash to induce the holders of any and all of the $4.88 billion principal amount outstanding of its 4.25% Senior Convertible Notes due December 15, 2036 (the “Convertible Notes”) to convert the Convertible Notes into shares of Ford’s common stock (the “Conversion Offer”); (2) a $500 million cash tender offer by Ford Credit (the “Term Loan Offer”) for Ford’s senior secured term loan debt (the “Term Loan Debt”); and (3) a $1.3 billion cash tender offer (the “Notes Tender Offer”) by Ford Credit for certain of Ford’s unsecured, non-convertible debt securities (the “Notes”).
Results of Conversion Offer
The Conversion Offer expired at 9:00 a.m., New York City time, on April 3, 2009 (the “Expiration Date”). As of the Expiration Date, approximately $4.3 billion principal amount of Convertible Notes were validly tendered and accepted for purchase, according to information provided by Computershare, Inc., the Exchange Agent with respect to the Conversion Offer. This will result in the issuance of an aggregate of approximately 468 million shares of Ford’s common stock and the payment of an aggregate of $344 million in cash ($80 in cash per $1,000 principal amount of Convertible Notes converted), plus the applicable accrued and unpaid interest on such Convertible Notes, on the expected settlement date of April 8, 2009. Upon settlement of the Conversion Offer, approximately $579 million aggregate principal amount of Convertible Notes will remain outstanding.
Holders who validly tendered and did not withdraw their Convertible Notes by 9:00 a.m., New York City time, on the Expiration Date and whose Convertible Notes were accepted for purchase will receive, for each $1,000 principal amount of the Convertible Notes converted, 108.6957 shares of Ford’s common stock plus $80 in cash and the applicable accrued and unpaid interest.
Previously Announced Results of Term Loan Offer
On March 23, 2009, Ford Credit announced that the Term Loan Offer, which expired at 5:00 p.m., New York City time, on March 19, 2009, had been over-subscribed. Based on the tenders received, Ford Credit increased the amount of cash used from $500 million to $1 billion to purchase $2.2 billion principal amount of Ford’s Term Loan Debt at a price of 47 percent of par. This transaction settled on March 27, 2009, following which Ford Credit distributed the Term Loan Debt to its immediate parent, Ford Holdings LLC. The distribution of the Term Loan Debt is consistent with Ford Credit’s previously announced plans to pay distributions to Ford of about $2 billion through 2010.
Approximately $4.6 billion aggregate principal amount of Term Loan Debt remains outstanding.
Results of Notes Tender Offer
Concurrent with this announcement, Ford Credit separately announced today by press release the results of its previously announced $1.3 billion cash tender offer for Ford’s unsecured, non-convertible debt securities. As of the April 3, 2009 expiration date of the Notes Tender Offer, approximately $3.4 billion principal amount of Notes were validly tendered and accepted for purchase, according to information provided by Global Bondholder Services Corporation, the Depositary and Information Agent with respect to the Notes Tender Offer. This will result in an aggregate purchase price for the Notes of approximately $1.1 billion, to be paid by Ford Credit on the expected settlement date of April 8, 2009. Upon settlement of the Notes Tender Offer, such Notes will be transferred from Ford Credit to Ford in satisfaction of certain of Ford Credit’s tax liabilities to Ford. After settlement of the Notes Tender Offer, approximately $5.5 billion aggregate principal amount of the Notes will remain outstanding.
In addition, as Ford previously announced, it has elected to defer future interest payments related to the 6.50% Cumulative Convertible Trust Preferred Securities of Ford Motor Company Capital Trust II (the “Trust Preferred Securities”), which will result in the deferral of $184 million in interest on the Trust Preferred Securities annually.
About Ford Motor Company
Ford Motor Company, a global automotive industry leader based in Dearborn, Mich., manufactures or distributes automobiles across six continents. With about 213,000 employees and about 90 plants worldwide, the company’s brands include Ford, Lincoln, Mercury and Volvo. The company provides financial services through Ford Motor Credit Company. For more information regarding Ford’s products, please visit www.ford.com.
About Ford Motor Credit Company
Ford Motor Credit Company LLC is one of the world’s largest automotive finance companies and has supported the sale of Ford Motor Company products since 1959. It is an indirect, wholly owned subsidiary of Ford. It provides automotive financing for Ford, Lincoln, Mercury and Volvo dealers and customers. More information can be found at www.fordcredit.com and at Ford Motor Credit’s investor center, www.fordcredit.com/investorcenter.
Safe Harbor and Other Required Disclosure
This news release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are based on expectations, forecasts, and assumptions by the management of Ford and involve a number of risks, uncertainties, and other factors that could cause actual results to differ materially from those stated, including, without limitation, those set forth in “Item 1A—Risk Factors” and “Item 7 —Management’s Discussion and Analysis of Financial Condition and Results of Operations —Risk Factors” of Ford’s Annual Report on Form 10-K for the year ended December 31, 2008. Readers are encouraged to read Ford’s filings with the Securities and Exchange Commission to learn more about the risk factors associated with Ford’s businesses.
Ford cannot be certain that any expectations, forecasts, or assumptions made by management in preparing these forward-looking statements will prove accurate, or that any projections will be realized. It is to be expected that there may be differences between projected and actual results. Our forward-looking statements speak only as of the date of their initial issuance, and we do not undertake any obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events, or otherwise.
2010 Ford Shelby GT500 Follow-Up Test
Quicker, Smarter, Nicer — Yet Still a Bad Boy
It's something like trying to drive the 2010 Ford Shelby GT500 on a roller-coaster, only there are no steel tracks to keep you from slithering off the pavement and ending up in a flaming heap of 540-horsepower Mustang.
You can't even see where you're going, really. Hard on it, the GT500's rear tires begin spinning just as you can see nothing but sky in the windshield. You're on top of the hump at the entrance to Infineon Raceway's Turn 6, and as your stomach and both right-side tires go weightless, you start a long, long dive to the left, sliding sideways all the way down the hill and around the 180-degree corner.
The Shelby GT500 is so torqued up with the cornering force from the low-profile 19-inch tires and the drive from the supercharged V8 that you can practically hear the welds popping in the chassis. But something is different this time — palms are not slick with sweat, tires are not threatening to let go at the most inopportune moment and steering left in order to go right is a joy and not a reflex of self-preservation.
The 2010 Ford Shelby GT500 gets 2 mpg more on the EPA highway cycle this year. The Ford engineers are really proud of this. But every time we make another lap and slide down Turn 6, we have our doubts that fuel economy is what this car is about.
Serving Our Inner Adolescent
We're behaving like adults as the Ford engineers tell us all about the 2010 Ford Shelby GT500, even as we hear a couple of the cars making shake-down runs on the quarter-mile strip at Infineon Raceway a few hundred feet away. And in many ways, the GT500 itself is trying to act more like an adult, casting aside the muscle-bound character of the 2007 Ford Shelby GT500.
As the Ford people tell us, they started with the limited-production 2008 Ford Shelby GT500KR, the exclusive (1,700 examples built) and revenue-enhancing (MSRP $79,995) Mustang produced last year. And aside from a few fewer Shelby badges (the KR had many to spare), the GT500 is like the KR in almost every way, except it's built at the Mustang plant in Flat Rock, Michigan, rather than at the Shelby facility in Las Vegas.
You can tell as soon as you open the new GT500's hood, complete with hot-air extractors. The supercharged and intercooled DOHC 5.4-liter V8 with its truck-style iron block is still in place, but now it carries a conical air filter in its own sealed cold-air box behind the left-side headlight, an innovation that increases airflow while resisting power-sapping heat soak. For the GT500, this new cold-air intake required the migration of the iconic Cobra badge on the grille from the left side to the right side.
With premium fuel and more aggressive ignition timing plus a less restrictive exhaust, the result is 540 hp at 6,200 rpm, an 8 percent increase. Torque output goes up fractionally to 510 pound-feet at 4,500 rpm. Thankfully, the telltale supercharger whine has been significantly diminished with clever intake plumbing, while the idle burble and bad-boy tailpipe blat have been accentuated by the 4-inch exhaust system.
Totally Awesome
It's not a lot of extra power, but your inner adolescent can put it to good use because the final-drive ratio is 3.55:1, 7 percent shorter than the former 3.31:1 rear-end gears. This means a useful increase in twist at the new, 19-inch forged-aluminum rear wheels, and the result is a blast to 60 mph from a standstill in a blistering 4.3 seconds (4.0 seconds with 1 foot of rollout, like on a drag strip). In comparison, the 2007 Ford Shelby GT500 made the run in 4.6 seconds, while the 2010 Chevrolet Camaro SS did the deed in 5.0 seconds (4.7 seconds with rollout) and the 2009 Dodge Challenger R/T recorded 5.5 seconds (5.3 seconds with rollout). The 2009 Dodge Challenger SRT8 does it in 5.1 seconds (4.8 seconds with rollout).
Quarter-mile performance is totally awesome as well, as the GT500 makes its best pass in 12.4 seconds at 114.7 mph. That's not only a useful margin over the '07 car with its 500-hp powertrain, which did the deed in 12.8 seconds at 112.6 mph, but it also makes the Chevrolet Camaro and Dodge Challenger look like weak-ass sissies. The Camaro turned the quarter in 13.0 seconds at 110.9 mph and the Challenger did 13.9 seconds at 103.2 mph. The Challenger SRT8 does it in 13.2 seconds at 107.5 mph. We might have gone even quicker and faster in the Shelby GT, except for the 14-mph headwind we faced at this track close to San Francisco Bay.
While it's as easy as ever to haze the rear tires off the line, the new softer tire compound has improved the bite. If you value bracket-racing consistency over all-out performance, the AdvanceTrac stability control's new Sport mode will do its best to optimize (though somewhat limit) traction for you. You might even select the launch rpm electronically for varying surfaces.
Adulthood Comes to the Shelby GT500
Though the GT500 has that big beat from under the hood that gets your attention, it has the tractable character of the KR, so it's easy to drive.
You can feel it in the controls. Everything operates with an easier, friction-free feel, so you don't feel like you're riding some kind of beast that's trying to spit you off at the first opportunity. The steering shaft is stiffer to deliver crisper response, even though the steering ratio remains at 15.7:1. The effort level for the brakes is scaled to humans, not superheroes. The shift action of the short-throw Tremec six-speed manual is short and sharp, not stiff. Even the clutch is surprisingly easy to modulate thanks to the use of larger, more robust copper/fiberglass plates that engage more progressively.
Compliance and balance are the secrets here, an approach more grown-up than the former Shelby's brawny, stiff-legged tuning. Where the previous GT500 and especially the KR would hop over a lane line if there were a twig at the apex of a corner, the 2010 GT500 acknowledges road irregularities, but those events don't linger and oscillate more than once. Bam, and it's done.
It begins with a compliant suspension tuned to deliver lots more roll control, only it comes from nearly twice as much rebound damping than before rather than simply stiffer springs. More negative camber at the front wheels also helps the steering bite with more effect when you turn into a corner, especially since the revised Goodyear Eagle F1 Supercar tires carry a softer compound.
Balance comes from a revised aerodynamic profile meant to improve high-speed handling and stability. A revised front splitter reduces front-end lift by 31 percent, while the rear wing is trimmed out to actually increase lift. Downforce can be tuned with the small Gurney flap.
Driving in the Real World
This Shelby GT makes you believe you're in an exclusive performance car, not just a Mustang with a decal package.
The seat upholstery is real leather and the inserts are suede. The rim of the steering wheel is suede. The silver trim for the dash is real aluminum, and it has a zippy dimpled finish. Soft-touch plastic is used and the gauges are specific to the GT500. When you fire up the car, the Shelby Cobra logo appears on the navigation screen.
With one hand on the suede rim of the steering wheel and the other on the shift lever's white cueball (manufactured by an actual billiard supply company) that has been inscribed with the racing stripes that are the visual theme of the GT500, you're looking forward to the drive.
We drive along California highway 1 from Stinson Beach to Fort Ross, and then cut inland through the California wine country to Calistoga. The Shelby lets you know that it has a live rear axle, but it doesn't make you slow down for fear of upsetting the car — a real breakthrough. If only it weren't for the seat headrests giving your head a nudge every time the axle kicks.
And this thing gets fuel economy. Although the final-drive ratio is far shorter than before, 5th and 6th gears are much taller. So the result is an EPA-rated 14 mpg city/22 mpg highway.
Coming to a Showroom Soon
We can't think of a more difficult place to drive a 540-hp pony car than Infineon Raceway, but once all the Ford people were gone and we were left on our own with the 2010 Ford Shelby GT500, we did lots of time on this 2.5-mile roller-coaster. And once we flicked off the stability control, the Shelby GT came alive. You could flick the Shelby into corners, and we came down Turn 6 with smoke coming from the rear tires. And the brakes offered good modulation and a crazy amount of capability.
By the end of a day, you can't help but like this car. It's stonking fast (though it doesn't always feel that way), it slides very controllably (especially when you find that special place that's like Turn 6) and it actually looks special (and exclusive) for a change. We'd even order one ourselves (though the stripes would have to go).
You can order one for yourself when it arrives in dealerships in the early summer. The price of the 2010 Ford Shelby GT begins at $48,125, and this includes the now-lower $1,000 gas-guzzler tax (thanks to the GT's 22-mpg highway rating) and $850 destination charge. Loaded with options as our test car was, the price can easily surpass 50 grand, though.
But like the original Shelby GT500, there's a level of sophistication and even luxury sewn into the fabric of this undeniably rapid and capable muscle machine. Sure, it'll throw down consistent 12s in the quarter-mile and slide around corners with glorious plumes of tire smoke, but it'll also tell you what traffic conditions lie ahead, play DVDs and promote marital harmony with dual-zone climate control. Name another 540-hp coupe for $50,000 that can do all that.
It's something like trying to drive the 2010 Ford Shelby GT500 on a roller-coaster, only there are no steel tracks to keep you from slithering off the pavement and ending up in a flaming heap of 540-horsepower Mustang.
You can't even see where you're going, really. Hard on it, the GT500's rear tires begin spinning just as you can see nothing but sky in the windshield. You're on top of the hump at the entrance to Infineon Raceway's Turn 6, and as your stomach and both right-side tires go weightless, you start a long, long dive to the left, sliding sideways all the way down the hill and around the 180-degree corner.
The Shelby GT500 is so torqued up with the cornering force from the low-profile 19-inch tires and the drive from the supercharged V8 that you can practically hear the welds popping in the chassis. But something is different this time — palms are not slick with sweat, tires are not threatening to let go at the most inopportune moment and steering left in order to go right is a joy and not a reflex of self-preservation.
The 2010 Ford Shelby GT500 gets 2 mpg more on the EPA highway cycle this year. The Ford engineers are really proud of this. But every time we make another lap and slide down Turn 6, we have our doubts that fuel economy is what this car is about.
Serving Our Inner Adolescent
We're behaving like adults as the Ford engineers tell us all about the 2010 Ford Shelby GT500, even as we hear a couple of the cars making shake-down runs on the quarter-mile strip at Infineon Raceway a few hundred feet away. And in many ways, the GT500 itself is trying to act more like an adult, casting aside the muscle-bound character of the 2007 Ford Shelby GT500.
As the Ford people tell us, they started with the limited-production 2008 Ford Shelby GT500KR, the exclusive (1,700 examples built) and revenue-enhancing (MSRP $79,995) Mustang produced last year. And aside from a few fewer Shelby badges (the KR had many to spare), the GT500 is like the KR in almost every way, except it's built at the Mustang plant in Flat Rock, Michigan, rather than at the Shelby facility in Las Vegas.
You can tell as soon as you open the new GT500's hood, complete with hot-air extractors. The supercharged and intercooled DOHC 5.4-liter V8 with its truck-style iron block is still in place, but now it carries a conical air filter in its own sealed cold-air box behind the left-side headlight, an innovation that increases airflow while resisting power-sapping heat soak. For the GT500, this new cold-air intake required the migration of the iconic Cobra badge on the grille from the left side to the right side.
With premium fuel and more aggressive ignition timing plus a less restrictive exhaust, the result is 540 hp at 6,200 rpm, an 8 percent increase. Torque output goes up fractionally to 510 pound-feet at 4,500 rpm. Thankfully, the telltale supercharger whine has been significantly diminished with clever intake plumbing, while the idle burble and bad-boy tailpipe blat have been accentuated by the 4-inch exhaust system.
Totally Awesome
It's not a lot of extra power, but your inner adolescent can put it to good use because the final-drive ratio is 3.55:1, 7 percent shorter than the former 3.31:1 rear-end gears. This means a useful increase in twist at the new, 19-inch forged-aluminum rear wheels, and the result is a blast to 60 mph from a standstill in a blistering 4.3 seconds (4.0 seconds with 1 foot of rollout, like on a drag strip). In comparison, the 2007 Ford Shelby GT500 made the run in 4.6 seconds, while the 2010 Chevrolet Camaro SS did the deed in 5.0 seconds (4.7 seconds with rollout) and the 2009 Dodge Challenger R/T recorded 5.5 seconds (5.3 seconds with rollout). The 2009 Dodge Challenger SRT8 does it in 5.1 seconds (4.8 seconds with rollout).
Quarter-mile performance is totally awesome as well, as the GT500 makes its best pass in 12.4 seconds at 114.7 mph. That's not only a useful margin over the '07 car with its 500-hp powertrain, which did the deed in 12.8 seconds at 112.6 mph, but it also makes the Chevrolet Camaro and Dodge Challenger look like weak-ass sissies. The Camaro turned the quarter in 13.0 seconds at 110.9 mph and the Challenger did 13.9 seconds at 103.2 mph. The Challenger SRT8 does it in 13.2 seconds at 107.5 mph. We might have gone even quicker and faster in the Shelby GT, except for the 14-mph headwind we faced at this track close to San Francisco Bay.
While it's as easy as ever to haze the rear tires off the line, the new softer tire compound has improved the bite. If you value bracket-racing consistency over all-out performance, the AdvanceTrac stability control's new Sport mode will do its best to optimize (though somewhat limit) traction for you. You might even select the launch rpm electronically for varying surfaces.
Adulthood Comes to the Shelby GT500
Though the GT500 has that big beat from under the hood that gets your attention, it has the tractable character of the KR, so it's easy to drive.
You can feel it in the controls. Everything operates with an easier, friction-free feel, so you don't feel like you're riding some kind of beast that's trying to spit you off at the first opportunity. The steering shaft is stiffer to deliver crisper response, even though the steering ratio remains at 15.7:1. The effort level for the brakes is scaled to humans, not superheroes. The shift action of the short-throw Tremec six-speed manual is short and sharp, not stiff. Even the clutch is surprisingly easy to modulate thanks to the use of larger, more robust copper/fiberglass plates that engage more progressively.
Compliance and balance are the secrets here, an approach more grown-up than the former Shelby's brawny, stiff-legged tuning. Where the previous GT500 and especially the KR would hop over a lane line if there were a twig at the apex of a corner, the 2010 GT500 acknowledges road irregularities, but those events don't linger and oscillate more than once. Bam, and it's done.
It begins with a compliant suspension tuned to deliver lots more roll control, only it comes from nearly twice as much rebound damping than before rather than simply stiffer springs. More negative camber at the front wheels also helps the steering bite with more effect when you turn into a corner, especially since the revised Goodyear Eagle F1 Supercar tires carry a softer compound.
Balance comes from a revised aerodynamic profile meant to improve high-speed handling and stability. A revised front splitter reduces front-end lift by 31 percent, while the rear wing is trimmed out to actually increase lift. Downforce can be tuned with the small Gurney flap.
Driving in the Real World
This Shelby GT makes you believe you're in an exclusive performance car, not just a Mustang with a decal package.
The seat upholstery is real leather and the inserts are suede. The rim of the steering wheel is suede. The silver trim for the dash is real aluminum, and it has a zippy dimpled finish. Soft-touch plastic is used and the gauges are specific to the GT500. When you fire up the car, the Shelby Cobra logo appears on the navigation screen.
With one hand on the suede rim of the steering wheel and the other on the shift lever's white cueball (manufactured by an actual billiard supply company) that has been inscribed with the racing stripes that are the visual theme of the GT500, you're looking forward to the drive.
We drive along California highway 1 from Stinson Beach to Fort Ross, and then cut inland through the California wine country to Calistoga. The Shelby lets you know that it has a live rear axle, but it doesn't make you slow down for fear of upsetting the car — a real breakthrough. If only it weren't for the seat headrests giving your head a nudge every time the axle kicks.
And this thing gets fuel economy. Although the final-drive ratio is far shorter than before, 5th and 6th gears are much taller. So the result is an EPA-rated 14 mpg city/22 mpg highway.
Coming to a Showroom Soon
We can't think of a more difficult place to drive a 540-hp pony car than Infineon Raceway, but once all the Ford people were gone and we were left on our own with the 2010 Ford Shelby GT500, we did lots of time on this 2.5-mile roller-coaster. And once we flicked off the stability control, the Shelby GT came alive. You could flick the Shelby into corners, and we came down Turn 6 with smoke coming from the rear tires. And the brakes offered good modulation and a crazy amount of capability.
By the end of a day, you can't help but like this car. It's stonking fast (though it doesn't always feel that way), it slides very controllably (especially when you find that special place that's like Turn 6) and it actually looks special (and exclusive) for a change. We'd even order one ourselves (though the stripes would have to go).
You can order one for yourself when it arrives in dealerships in the early summer. The price of the 2010 Ford Shelby GT begins at $48,125, and this includes the now-lower $1,000 gas-guzzler tax (thanks to the GT's 22-mpg highway rating) and $850 destination charge. Loaded with options as our test car was, the price can easily surpass 50 grand, though.
But like the original Shelby GT500, there's a level of sophistication and even luxury sewn into the fabric of this undeniably rapid and capable muscle machine. Sure, it'll throw down consistent 12s in the quarter-mile and slide around corners with glorious plumes of tire smoke, but it'll also tell you what traffic conditions lie ahead, play DVDs and promote marital harmony with dual-zone climate control. Name another 540-hp coupe for $50,000 that can do all that.
GM in "intense" preparations for bankruptcy: source
NEW YORK/DETROIT (Reuters) - General Motors Corp is in "intense" and "earnest" preparations for a possible bankruptcy filing, a source familiar with the company's plans told Reuters on Tuesday.
A plan to split the corporation into a "new" company made up of the most successful units, and an "old" one of its less-profitable units, is gaining momentum and is seen as the most sensible configuration, said another source familiar with the talks.
If the plan goes through, the new GM would be expected to assume some previous creditor debt from bankruptcy proceedings, such as secured debt, said the second source, adding that GM bondholders were likely to lose substantial value in bankruptcy.
Certain GM dealer and litigation claims would also be hurt if the new company structure is used as part of a company bankruptcy, said the second source.
The sources requested anonymity because they were not authorized to speak on the record.
GM declined to comment.
Shares of GM fell almost 12 percent on the New York Stock Exchange to end at $2.00.
GM bonds were mixed in afternoon trading, with GM's benchmark 8.375 percent note up less than 1 cent on the dollar to 11.75 cents, yielding more than 70 percent, versus about 11 cents with a 75 percent yield on Monday, according to MarketAxess data. The bond had slipped in earlier trading.
Two other GM notes were slightly lower in late afternoon trading.
OPTIONS FOR GM
GM, operating on $13.4 billion of government loans since the start of the year, has until June 1 to complete a reorganization plan. The government has warned that the alternative would be bankruptcy.
The company is under pressure to cut unsecured debt by two-thirds, turn half its remaining payments into a union healthcare trust in the form of equity rather than cash, and reduce hourly wages and benefits to match those paid by foreign automakers.
Chrysler, owned by Cerberus Capital Management LP, is also facing possible bankruptcy. The automaker has until April 30 to complete an alliance with Italian automaker Fiat.
Moody's Investor Service said in a note dated Monday that it maintains its view for a 70 percent risk of bankruptcy for Detroit's three automakers given the difficulty of restructuring out of court.
GM Chief Executive Fritz Henderson has said the company prefers to restructure out of court but that it could go to court if needed.
"If a company of this size files for bankruptcy, they have to be preparing for it now as time is running out and bankruptcy becomes more real," said Van Conway, a turnaround expert at Conway MacKenzie.
"But I think they should attempt to avoid it because emerging out of bankruptcy would be very difficult. Given its very large, global operations and various stakeholders, the process will take a lot longer than what people think," Conway said.
BANKRUPTCY NOT EASY
Canadian Industry Minister Tony Clement said on Tuesday that the Canadian government must be prepared for GM or Chrysler to enter bankruptcy protection.
Some bankruptcy experts say a Chapter 11 bankruptcy filing could help GM reorganize by allowing it to restructure its debt and force changes to contracts with dealers, unions and suppliers. But the process could be disruptive, or derailed, said Patrick Carothers, a partner at Thorp, Reed & Armstrong LLP.
For example, if auto-parts makers lose the ability to collect money owed, the industry as a whole could suffer. In addition, GM could lose control over its restructuring as the formation of a new company would be in the hands of a bankruptcy judge, not corporate executives or their advisers.
"The dangers of a bankruptcy are significant," said Carothers, who has parts suppliers and car dealers as clients. "I don't believe a bankruptcy is inevitable. There's still a lot of political pressure to save it."
Last month, GM offered bondholders 8 cents on the dollar in cash, 16 cents on the dollar in new unsecured debt, and a 90 percent stake in the automaker, one person with knowledge of the term sheet told Reuters.
A plan to split the corporation into a "new" company made up of the most successful units, and an "old" one of its less-profitable units, is gaining momentum and is seen as the most sensible configuration, said another source familiar with the talks.
If the plan goes through, the new GM would be expected to assume some previous creditor debt from bankruptcy proceedings, such as secured debt, said the second source, adding that GM bondholders were likely to lose substantial value in bankruptcy.
Certain GM dealer and litigation claims would also be hurt if the new company structure is used as part of a company bankruptcy, said the second source.
The sources requested anonymity because they were not authorized to speak on the record.
GM declined to comment.
Shares of GM fell almost 12 percent on the New York Stock Exchange to end at $2.00.
GM bonds were mixed in afternoon trading, with GM's benchmark 8.375 percent note up less than 1 cent on the dollar to 11.75 cents, yielding more than 70 percent, versus about 11 cents with a 75 percent yield on Monday, according to MarketAxess data. The bond had slipped in earlier trading.
Two other GM notes were slightly lower in late afternoon trading.
OPTIONS FOR GM
GM, operating on $13.4 billion of government loans since the start of the year, has until June 1 to complete a reorganization plan. The government has warned that the alternative would be bankruptcy.
The company is under pressure to cut unsecured debt by two-thirds, turn half its remaining payments into a union healthcare trust in the form of equity rather than cash, and reduce hourly wages and benefits to match those paid by foreign automakers.
Chrysler, owned by Cerberus Capital Management LP, is also facing possible bankruptcy. The automaker has until April 30 to complete an alliance with Italian automaker Fiat.
Moody's Investor Service said in a note dated Monday that it maintains its view for a 70 percent risk of bankruptcy for Detroit's three automakers given the difficulty of restructuring out of court.
GM Chief Executive Fritz Henderson has said the company prefers to restructure out of court but that it could go to court if needed.
"If a company of this size files for bankruptcy, they have to be preparing for it now as time is running out and bankruptcy becomes more real," said Van Conway, a turnaround expert at Conway MacKenzie.
"But I think they should attempt to avoid it because emerging out of bankruptcy would be very difficult. Given its very large, global operations and various stakeholders, the process will take a lot longer than what people think," Conway said.
BANKRUPTCY NOT EASY
Canadian Industry Minister Tony Clement said on Tuesday that the Canadian government must be prepared for GM or Chrysler to enter bankruptcy protection.
Some bankruptcy experts say a Chapter 11 bankruptcy filing could help GM reorganize by allowing it to restructure its debt and force changes to contracts with dealers, unions and suppliers. But the process could be disruptive, or derailed, said Patrick Carothers, a partner at Thorp, Reed & Armstrong LLP.
For example, if auto-parts makers lose the ability to collect money owed, the industry as a whole could suffer. In addition, GM could lose control over its restructuring as the formation of a new company would be in the hands of a bankruptcy judge, not corporate executives or their advisers.
"The dangers of a bankruptcy are significant," said Carothers, who has parts suppliers and car dealers as clients. "I don't believe a bankruptcy is inevitable. There's still a lot of political pressure to save it."
Last month, GM offered bondholders 8 cents on the dollar in cash, 16 cents on the dollar in new unsecured debt, and a 90 percent stake in the automaker, one person with knowledge of the term sheet told Reuters.
Monday, April 6, 2009
Ford eyes 305-hp U.S. Focus
DETROIT — Ford may add a 300-plus-hp Focus to its U.S. lineup.
The Focus RS, a three-door hatchback sold in Europe, is powered by a turbocharged 2.5-liter five-cylinder Volvo engine with 305 hp.
Hermann Salenbauch, Ford Motor Co.'s director of advanced product creation and global performance, says the decision to sell the Focus RS here will depend on reaction from U.S. car enthusiasts, such as Focus SVT owners.
Ford is looking for "feedback from the media and customers," he says. "How much do they like it? Is it really what they want? We are pretty confident that it is."
The restyled, Europe-engineered 2011 Focus goes on sale here in late 2010, replacing the current model. The car will be assembled in North America. The RS model for the United States would be based on that platform, Salenbauch says. He did not say when it would arrive.
The three-door Focus SVT, a high-performance model, was discontinued during the 2004 model year. It had a $19,205 sticker, including shipping. Salenbauch says an RS model would be priced higher.
British magazine AutoCar published a gushing review of the Focus RS: "Remortgage the house, rob a bank, sell yourself, sell your own grandmother, just do whatever it takes to put an RS on your drive."
The Focus RS, a three-door hatchback sold in Europe, is powered by a turbocharged 2.5-liter five-cylinder Volvo engine with 305 hp.
Hermann Salenbauch, Ford Motor Co.'s director of advanced product creation and global performance, says the decision to sell the Focus RS here will depend on reaction from U.S. car enthusiasts, such as Focus SVT owners.
Ford is looking for "feedback from the media and customers," he says. "How much do they like it? Is it really what they want? We are pretty confident that it is."
The restyled, Europe-engineered 2011 Focus goes on sale here in late 2010, replacing the current model. The car will be assembled in North America. The RS model for the United States would be based on that platform, Salenbauch says. He did not say when it would arrive.
The three-door Focus SVT, a high-performance model, was discontinued during the 2004 model year. It had a $19,205 sticker, including shipping. Salenbauch says an RS model would be priced higher.
British magazine AutoCar published a gushing review of the Focus RS: "Remortgage the house, rob a bank, sell yourself, sell your own grandmother, just do whatever it takes to put an RS on your drive."