GM fights shy of axing US brands in restructure plan

GM executives were back on the show floor on Tuesday. A group of senior GM bosses, including Bob Lutz, Carl-Peter Forster and Fritz Henderson, toured the show, checking out the competition – including upstart EV makers Fisker and Tesla.

The show tour will have provided some light relief for the GM management. By February 17, the company's revival plan has to be submitted to the US Government. And more details of the company's thinking is starting to emerge.

Central to the cost-cutting efforts is a major reduction in the GM US dealer network from 6,400 to 4,700 – but whether GM will eliminate any of its brands now looks questionable. Saturn, which had looked vulnerable, may now survive. It has been repositioned as an environmentally friendly brand, and as a stand-alone franchise, terminating the network could be an expensive business.

GM still has unhappy memories of the $1 billion it cost to ditch Oldsmobile a decade ago – the sort of cost it can ill-afford in the current financial climate. GM Chairman Rick Wagoner said “All the options with Saturn are on the table.”

More likely is the elimination of almost all the Pontiac range – just a single model could be retained. Pontiac, GMC and Buick share a dealer network in the US, and both Buick and GMC are considered core brands.

So the only brands likely to be shed are Hummer, which now looks like a brand whose time has gone, and Saab, which desperately needs new product investment – again, something that is beyond GM's reduced budget. Whether anybody wants to buy these brands is another matter.

GM also needs to restructure around $60m of debt, which requires cooperation of bondholders and Unions. Without that, GM could be looking at Chapter 11 bankruptcy protection. Wagoner admitted at the show that while GM was desperate to avoid this, “it’s only prudent for us to be prepared for all options”.

Some analysts believe Chapter 11 is still likely. Rod Lache, a Deutsche Bank analyst, told the Society of Automotive Analysts conference at Detroit: “The probability is greater than not that there will be bankruptcy at GM.”

The crunch will come at the end of March, when the US authorities decide whether to provide further loans to BM and Chrysler. It's likely to be a nervous time in Detroit over the next few weeks.