Car Blog » Financial Crisis

White House Declares the Success of Auto Bail Out but There’s a Catch

CarBlog — Thu, 29 Apr 2010 12:45:33 +0000

A year ago, the USA’s auto industry, along with the rest of the economy, was at its lowest point. To worsen the situation, Americans wanted to wash their hands off the bail out. They have reason to, having just gone through pricier loans mandated by the country’s leading lenders. Still, President Obama with the country’s Auto Task Force decided to tighten their belts and aid Chrysler and General Motors through the bankruptcy (also thanks to the Cash for Clunkers program).

While this move provided the two manufacturers with $50 billion worth of loans, and kept a lot of employees off the streets, the fiscal and political costs were pretty high. Before this move, the Congressional Budget Office and the Treasury Department of the United States already estimated a total of $30 billion in losses.

According to Detroit News, the White House seems more optimistic about the money and the industry a year after that rough estimate. This is probably borne of the positive note in President Obama’s report regarding Chrysler’s operating profit and GM’s early pay off. The figures were friendly and the bail out was a success, White house reported. The latest projection by the Treasury Department and DOT decreased from $30 billion to $8 billion. While it’s significantly less than the predicted losses a year ago, America will still lose money.

The US government will now be focusing on getting that money back once GM releases its offering to the public. It is rumored that the company will be doing just that by June this year. The US Government currently owns 60.8% of General Motors.

Karmann closes its doors after a year-long battle with bankruptcy and purchase threats

CarBlog — Tue, 15 Sep 2009 20:40:52 +0000

The global financial crisis has hit the car industry so hard that automakers worldwide have been reportedly filing bankruptcies and closures one after another. At present, those who are lucky enough to dodge bankruptcies are trying to keep afloat with diminishing sales or new ownerships.

Sadly, another car company is raising the white flag. Karmann, who has become famous for the conversion of its Karman Ghia, is finally shutting it doors. Almost a year has passed with back to back bankruptcy scares, closures, and purchase.

Of course, the next possible step is filing for bankruptcy. However, the firm is not yet certain if Karmann would take the alternate route.

While Karmann holds contracts for other companies, the latest model it built was the Mercedes-Benz CLK, which the E-Class Coupe replaced.

Sadly, the convertible rolled off Karmann’s assembly earlier this week. According the a report in The Straits Times, with the parting of the last Karmann-built model, the world is not guessing whether a successful comeback for Karmann is possible, in the hands, of course, of one or more new owners.

The sudden closure of Karmann was followed by a fight with IG Metall, the company’s workers union. However, the global financial crisis that hit the industry hard gets the blame for it has reduced the production dramatically.

Few of Karmann’s most valuable produce are as follows: Mercedes CLK, Beetle, Ford Escort, and a few Audi cabrios. The models have given Karmann roughly 3.3 million since 1949. Today, however, we have to wait to see what path Karmann would take.