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 GMs 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 dont become part of New GM would be liquidated.
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 Americas 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 hasnt 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 industrys 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."
Jamie LaReau contributed to this report.