Tag Archive | "GM"

GM Extends Top Lawyer’s Stay as Search for Successor Still Ongoing

General Motors Co said it has extended the tenure of its top lawyer, whose department was criticized over how it handled the issue of the automaker’s defective ignition switch linked to more than 50 deaths, and the search for a replacement is ongoing, reported Reuters.

Michael Millikin, 66, will now retire in July and be “available for consulting services” through the end of the year, according to a footnote in the Detroit company’s quarterly financial report filed last week with the U.S. Securities and Exchange Commission.

Last October, GM said Millikin would retire early in 2015 but remain general counsel, a position he has held since 2009, until a successor was named.

GM spokesman Jim Cain said on Monday that “the search is in great shape,” but declined to provide further details on when a replacement would be named.

The No. 1 U.S. automaker last year faced criticism for waiting 11 years to recall millions of cars with ignition-switch problems that were linked to fatalities. The switch can slip out of position, stalling the vehicle and disabling air bags, and the defect led to the recall of 2.6 million vehicles.

The company is being investigated by state and federal prosecutors for issues related to the faulty switch.

GM said in October that Millikin was not forced out and had even been asked by Chief Executive Mary Barra to stay on longer.

As part of their attempt to build a case against GM, sources said last summer that U.S. federal prosecutors were looking at whether lawyers who attended key meetings about the switch problems acted appropriately after the meetings or whether they mishandled information discussed.

Millikin’s legal department was heavily criticized in a 325-page report released by GM last June. Many of the 15 people fired or forced out from the department were attorneys or had worked under Millikin. However, the report said Millikin did not know the details of the ignition switch problem until early last year.

When Barra and Millikin were questioned at a U.S. Senate hearing last July, lawmakers demanded to know why Millikin was not fired. Barra defended Millikin at the time as “a man of incredible high integrity.”

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GM Financial Triples Share of GM Leases

SAN FRANCISCO AND FORTWORTH, Texas — Ally’s reaction to General Motors internalizing its leasing program came up at the end of GM Financial’s fourth quarter 2014 earnings call. Daniel Berce, the captive’s president and CEO, said the decision shouldn’t have surprised executives with GM’s former captive finance arm.

“That’s about increasing customer loyalty,” Berce said of GM’s decision. “Lease is a very important product from a loyalty standpoint, and having that customer data and relationship in-house and within control of the GM umbrella was extremely important. Taking that profitability in-house was another factor to consider.

“I don’t think bringing it in-house should be a surprise if you look at our ramp of penetration through 2014,” he added, noting that the firm started out the year with about a 15% share in GM leases. It finished 2014 with just less than a 50% share of the OEM’s lease business.

GM Financial doubled its lease origination volume from a year ago to $7 billion. For the December quarter alone, lease origination volume totaled $2.1 billion.

GM’s decision to end its leasing relationship with Ally Financial and U.S. Bank was announced shortly after the end of last quarter, with GM Financial officially becoming the OEM’s exclusive subvented lease provider for Buick-GMC on Feb. 3.

“Cadillac will follow closely after that [in March], then Chevy,” Kyle Birch, executive vice president and COO of North America, to F&I and Showroom at last month’s 2015 National Automobile Dealers Association (NADA) Convention & Expo in San Francisco. “By mid-year, we’ll have full lease exclusivity with all GM brands.”

Birch noted that GM Financial spent a lot of time and investment last year bringing its systems online in anticipation of the November 2014 rollout of its prime APR product. The company also rolled out last May a floorplan financing product; Berce noting during the company’s investor call that he has “pretty modest aspirations” for the product in terms of market share.

“We don’t have any plans at this point to supplant other providers,” he said.

But developing score cards and adding auto decisioning systems for its prime business weren’t the only infrastructure investments the company made last year. Under the direction of Will Stacy, senior vice president of digital and technology services, GM Financial is also working on systems that will drive a better connection between customers, GM and the OEM’s dealers.

“We’re trying to build integration tools with GM so you can apply for credit in an easier way through their sites and through their dealer’s sites,” Stacy told F&I and Showroom at the NADA’s annual convention. “So the idea would be, we’d offer an application or widget that goes on dealership sites so you can apply for a GM Financial loan through one of those 4,200 websites that GM and Cobalt host for their dealers, as well as a beefed up the customer experience for current and future customers with native applications on iPhones, Androids and customer portals.”

The goal, Birch added, is to create touchpoints that will allow customers to interact with the captive finance company however they want, whether through its chat features on the captive’s website, self-service portals or mobile connectivity. “We want to make sure when we have a customer on the books that we’re touching them at the right time to drive them back to the dealers,” Birch explained.

The investments made in the company’s infrastructure were partly responsible for the decrease in pre-tax earnings in the December quarter, which fell from $225 million in the year-ago quarter to $120 million, Birch noted. The company’s acquisition of Ally Financial’s international operations was another factor.

Full-year earnings for the captive were $537 million, down from $556 million in 2013. For the December quarter, the company posted earnings of $59 million, down from $121 million in the year-ago quarter.

Full-year consumer loan and lease originations totaled $21.4 billion, $6 billion for the December quarter alone. Prime originations for GM vehicles totaled $493 million for the year. Outstanding balances of consumer finance receivables totaled $25.7 billion for the year.

The company also added 81 dealers to its commercial lending business, bringing the captive’s total dealer count to 487.

Birch also noted stable credit metrics, with consumer finance receivables 31 to 60 days delinquent accounting for 4.2% of the captive’s portfolio as of Dec. 31, 2014. Accounts more than 60 days delinquent were 1.7%.

Annualized net losses were 2.2% of average consumer finance receivables for the December quarter, up from $2.1% one year ago. For the year, consumer net losses were 1.9%.

GM Financial also reported having total available liquidity of $9.3 billion as of Dec. 31, 2014. That total consisted of $3 billion of unrestricted cash, $4.8 billion of borrowing capacity on unpledged eligible assets, and $0.5 billion of borrowing capacity on unsecured lines of credit and $1 billion of borrowing capacity on a junior subordinate revolving credit facility from GM.

“2014 was a good year for our company,” Birch said at the NADA convention. “Every quarter we had improvement in volume and credit losses. The biggest thing for us in 2014 is we spent a lot of time and investment on bringing all of our systems together, understanding that we were going to get in the prime business from an APR perspective.”

Asked if the company would venture into F&I products for GM, Birch said, “We’re not doing that right now. The products out there right now are GM-based and -backed. We helped in some of the rollout of those products. Now that’s being handled internally by GM. We would expect at some point in our future, and I can’t tell you when, but there’s a natural evolution for those types of products to come back to the finance company.”

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GM Sales Jump 18.3%, Ford Up 15.3%, FCA Up 14% in January

Detroit’s automakers on Tuesday all posted strong sales increases in January compared to a year ago, led by General Motors Co.’s 18.3 percent gain — its best January in seven years, reported The Detroit News.

Buyers took advantage of low gas prices, easy access to credit and stable feelings about the economy to buy vehicles, particularly full-size trucks, crossovers and SUVs. Better weather than a year ago also seemed to aid sales, which analysts expect will come in more than 10 percent higher than January 2014.

Ford Motor Co. saw January sales jump 15.3 percent to 178,351, while FCA US LLC, formerly Chrysler Group LLC, also posted a 14 percent sales gain in January.

GM said its U.S. sales to retail customers and fleet customers increased by 14 percent and 32 percent, respectively.

GM saw big gains from its Chevrolet brand, up 20 percent; GMC was up 28.6 percent and Cadillac had a 2.6 percent sales gain. Sales for Buick fell by 5.5 percent.

The Detroit automaker was boosted by big increases in pickup sales — up 42 percent year-over-year — and sales of crossovers and SUVs jumped 36 percent from January 2014.

“Consumers feel very good because more people are working, the U.S. economy is expanding and fuel prices are low,” said Kurt McNeil, GM’s U.S. vice president of sales operations, in a statement. “Consumer and commercial demand for trucks and crossovers is really driving our business, and our move into the small crossover segment with the Chevrolet Trax and Buick Encore, and mid-size pickups with the Chevrolet Colorado and GMC Canyon, was well-timed.”

Ford said its retail sales increased by 13 percent — the best retail sales month for Ford since 2004. The Dearborn automaker said passenger car sales to retail customers rose by 6 percent, utilities were up 10 percent and truck sales rose 23 percent.

Ford sold 54,370 F-Series pickups last month, up 16.8 percent in January, marking the best January for F-Series since 2004. Lincoln brand sales also jumped 10.8 percent.

FCA posted its best January sales since 2007 with 145,007 vehicles sold last month.

“We kicked off 2015 with a 14 percent increase in sales and extended our year-over-year sales streak to 58 consecutive months,” said Reid Bigland, FCA’s head of U.S. sales, in a statement. “In spite of some tough 2015 comparisons, we remain confident in our ability to post year-over-year sales increases on the back of strong retail demand for our products.”

FCA said its Chrysler, Jeep, Dodge, Ram Truck and Fiat brands each posted year-over-year increases, led by Jeep’s 22.9 percent increase. The company said 10 vehicles set January sales records including four Jeep vehicles. Ram pickup sales also jumped 14 percent.

Toyota Motor Sales USA Inc. said its sales jumped 15.6 percent in January, as light truck and Lexus brand sales set January sales records.

“This year is off to a strong start as the sales momentum we saw in 2014 continued into January,” Bill Fay, Toyota division group vice president and general manager, said in a statement.

Nissan Motor Co. Ltd. said its total U.S. sales rose 15.1 percent in January, with its Nissan division setting a January record with 94,449 sales, up 15.9 percent.

American Honda Motor Co. Inc. said it had record U.S. sales in January of 102,184, up 11.5 percent from a year ago. Its Honda brand set a January record with 90,202 sales, up 11.6 percent, while Acura brand sales increased by 10.7 percent.

Meanwhile, Hyundai Motor America said its January sales rose 1.1 percent to 44,505 vehicles, setting a January record. Kia Motors America also had record January sales of 38,299, up 3.5 percent year-over-year. Volkswagen of America Inc. posted flat sales of 23,504 in January.

TrueCar Inc., a car-buying and -selling marketplace, said it predicts U.S. auto sales will reach nearly 1.15 million vehicles in January, up 13.2 percent from January 2014. January 2015 had one extra selling day than January 2014. Kelley Blue Book estimated a similar increase of 12.9 percent, though it noted some final selling days of the month may have been hampered by bad weather in the East.

“Full-size trucks continue to thrive in 2015 and Kelley Blue Book anticipates sales will improve more than 10 percent in January alone,” said Alec Gutierrez, Kelley Blue Book senior analyst, in a statement. “Expect a strong push from Chevrolet Silverado, GMC Sierra, Ram and F-Series, especially when taking into consideration the low cost of fuel and the appeal of these recently redesigned core products.”

Many industry forecasters are calling for U.S. auto sales to reach 17 million in 2015 after hitting 16.52 million last year, up by nearly 1 million sales from 2013.

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GM Gets Deadline Flurry of Compensation Claims

The Jan. 31 deadline for claims to General Motors’ victim compensation fund spurred a flurry of 1,100 new filings, reported The Detroit Bureau.

The rush brought the total number of filings to 4,180, including 455 death benefits: an increase from 338 the week prior. Claims for the most severe injuries rose to 278, up from 224 a week earlier, and filings for less severe injuries jumped to 3,447 from 2,508 a week earlier.

The fund is administered by Kenneth Feinberg, an attorney whose firm oversaw similar funds related to the BP oil spill and other issues, who said in a radio interview yesterday that he expects the total number of filings to rise a bit more because any claims post marked for Jan. 31 will be accepted.

Last week, two U.S. Senators – Richard Blumenthal (D-Conn.) and Edward Markey (D-Mass.) – asked GM to extend the deadline because they believed the claimants did not have enough information to make a decision on whether or not to file. The automaker declined. It would have been the second extension of the deadline as Feinberg convinced the company to extend the original Dec. 31 deadline by a month.

Feinberg said he believed the second extension was unnecessary and if someone didn’t know about about the deadline they were “living under a rock.” Georgia attorney Lance Cooper, whose firm submitted 45 claims to the fund, including 20 for deaths, told the Detroit News he felt the number of lawsuits agains the automaker would rise because the of the failure to extend the deadline. Cooper believes potential claimants should have had a year to file.

The lawsuits may come anyway. The U.S. Bankruptcy Court is considering allowing suits to be filed against the automaker, which was formed out of bankruptcy, despite the new company’s liability shield. The company is not using the shield against those who filed claims with the fund.

Thus far, Feinberg and his team have approved death benefits for 51 people, which is up from the initial 13 deaths attributed to the problem. There also have been eight claims for serious injuries approved and 69 for lesser injuries. The amount of the benefit varies upon the circumstances, but each death benefit recipient receives at least $1 million.

The fund, which could pay out as much as $600 million, was established by GM last year for victims and their families who were killed or injured as a result of the company’s faulty ignition switches. The switches could toggle out of the “run” mode in to “accessory” mode cutting off the vehicle’s power steering and brakes as well as shutting off its airbags.

Ultimately, GM recalled nearly 2.6 million of the vehicles – some of which were a decade old – last year and made multiple appearances before Congressional committees and is subject to a variety of lawsuits as well as an investigation by the Justice Department.

A federal bankruptcy court is deciding whether to let claims proceed. General Motors Co., which was formed in a government-sponsored sale of assets from its predecessor’s 2009 bankruptcy reorganization, has said it will not invoke its bankruptcy liability shield in the case of injuries or deaths to avoid paying claims, but is fighting other claims made by owners of vehicles for economic losses.

A hearing is set for Feb. 17 in U.S. Bankruptcy Court in New York on the issue. If GM wins, victims of crashes before the restructuring likely could not sue GM.

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Approved Death Claims Related to GM Ignition Switch Recall Hit 50

The number of approved death compensation claims related to a recall of a faulty General Motors ignition switch has risen to 50, reported MLive.

The claims were approved by a fund set up by GM to compensate victims of a defective part in mid-to-late-2000s model cars that has led to a massive recall and a federal investigation.

The number of approved claims stood at 19 in mid-September and had grown steadily to 36 at the beginning of December and then to 42 in the middle of last month. They stood at 49 on Jan. 16.

The victim compensation fund is being overseen by Kenneth Feinberg, a Washington, D.C. attorney who oversaw similar compensation facilities for disasters such as the BP Gulf of Mexico oil spill and the Sept. 11 terrorist attacks. The GM ignition switch claims facility released its latest report Friday.

The latest tally of claims received stands at 3,068, including 338 death claims, 224 “Category One” injury claims, or those resulting in quadriplegia, paraplegia, double amputation, permanent brain damage or pervasive burns, and 2,506 “Category Two” injury claims, or injuries that required a hospital visit within 48 hours of an accident.

To date, there have been 125 claims determined eligible, including the 50 death claims, as well as seven Category One injury claims and 68 Category Two claims.

The deadline for filing a compensation claim has been extended to Jan. 31.

According to the claims resolution facility’s program statistics, 386 claims have been deemed ineligible, while 908 are deficient and 802 are under review. Another 847 claims have been submitted with no documentation.

GM has estimated that compensating all victims of the defective car part could cost the Detroit automaker anywhere from $400-600 million.

GM has recalled 2.6 million vehicles, including 2.2 million in the U.S., affected by the ignition switch. The recall includes 2003-2007 Saturn Ions, 2007-2010 Saturn Skys, 2005-2011 Chevrolet HHRs, 2006-2010 Pontiac Solstices, and 2005-10 Chevrolet Cobalt and Pontiac G5 models.

The faulty ignition switches at the heart of the unprecedented recall can move out of the “run” position to the “accessory” or “off” positions, leading to a loss of power. The risk may be increased if the key ring is carrying added weight or if the vehicle goes off road or experiences some jarring event, including rough roads. If the key turns to one of those positions, officials say the front air bags may not work if there’s a crash.

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GM Does Not Have to Turn Over Notes to Ignition-Flaw Plaintiffs: Judge

A U.S. judge on Thursday refused to let plaintiffs’ lawyers suing General Motors Co access notes from lawyers the company hired to prepare an internal report on the automaker’s decade-long mishandling of a deadly ignition-switch flaw, reported Reuters.

U.S. District Judge Jesse Furman in Manhattan said interview notes from the “Valukas report” – named for Anton Valukas, chairman of law firm Jenner & Block, who GM hired to spearhead the investigation – were protected by attorney-client privilege.

While the ruling shields materials that could boost the cases by plaintiffs, they will be able to learn the identities of interviewed witnesses who were not named in the report.

Facing a backlash over its handling of the ignition-switch defect, GM tapped Valukas, a former federal prosecutor, last year to conduct a comprehensive review of why the company took so long to address the problem. The defect resulted in the recall of 2.6 million vehicles. A program to compensate victims has so far identified 45 deaths linked to the switch.

Valukas and his firm conducted more than 350 interviews with 230 witnesses, Furman wrote, and each lawyer took careful notes and prepared summaries of the conversations. The final report issued in June 2014 cited a series of missteps by GM employees, from lawyers to engineers, which allowed the problem to go unresolved for years.

The report is public, and GM has agreed to produce documents cited in the report to plaintiffs’ lawyers, who have sued on behalf of individuals injured or killed as a result of the switch, and customers whose vehicles lost value.

However, the company balked at turning over certain materials, including interview notes. GM said the notes were protected by attorney-client privilege because they were prepared by Jenner & Block lawyers. But plaintiffs’ lawyers argued that GM never intended to keep the Valukas report confidential, and that the notes were not protected because they were not legal advice.

Furman disagreed, saying GM had established a “valid claim” that the communications were privileged. And “the cost of withholding the materials is outweighed by the benefits to society of encouraging full and frank communication” between lawyer and client, he wrote.

Plaintiffs’ lawyer Steve Berman said he was disappointed with the ruling, but pleased to receive the list of unnamed witnesses. He also said plaintiffs believed the report was “flawed.”

GM did not immediately respond to a request for comment.

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