General Motors Corp. received the second piece of its government loan package Wednesday, a $5.4 billion installment that will allow the giant automaker to pay its bills and avoid running out of cash.
The latest installment, which came five days later than scheduled, brings to $9.4 billion the amount that GM has received in loans from the U.S. Treasury Department. The company is to get another $4 billion Feb. 17 when it submits a plan to the government to show how it will become viable.
Fritz Henderson, GM's president and chief operating officer, said Tuesday night that without the second installment, the company would run out of cash.
In December, the Treasury Department authorized $13.4 billion in loans for GM and another $4 billion for Chrysler LLC to keep both automakers out of bankruptcy.
Henderson told the Automotive News World Congress in Detroit that the money is critically needed to pay its bills. He attributed the delay in receiving the second installment to the Treasury Department's workload and the transition between the Bush and Obama administrations.
Henderson also disagreed with United Auto Workers President Ron Gettelfinger who said on Monday that that a mid-February deadline for General Motors and Chrysler to complete their restructuring plans may be "almost unattainable" and that the automakers may have been set up to fail.
Henderson said the Treasury Department wouldn't have worked as hard as it did to provide the loans to GM and its financial arm GMAC LLC if it was setting up failure, and he said he's confident GM can meet the Feb. 17 deadline to turn in its viability plan.
"It's a tight time frame. We're confident we can achieve all our milestones. Not everything has to be done by Feb. 17," he said.
By then, the company needs to have a good sense of where it's headed in terms of getting concessions from bondholders and the UAW, Henderson said.
Although formal talks have not yet begun with the UAW, GM has supplied information and has been talking informally almost continually, he said.
He also said January U.S. sales were looking a lot like December, which was among the worst months in the past quarter-century.
And he told the group that GM will have four core brands in the future: Cadillac, Chevrolet, Buick and GMC.
GM is reviewing the Saturn brand with its dealers, is studying Saab and Hummer for sale and will shrink Pontiac to a performance niche brand.
Henderson also predicted that oil prices will rise rapidly once global economic activity recovers, justifying GM's electric car research spending.
GM is spending millions to develop the Chevrolet Volt, a plug-in vehicle that can go 40 miles on a single electric charge. After that, a small internal combustion motor kicks in to generate electricity for the car until it can be plugged in again. GM plans to bring the car to showrooms in late 2010.
Henderson also told the group of industry insiders at the annual gathering sponsored by the trade publication that it's not a big deal if GM is passed by Toyota Motor Corp. as the global sales leader for the first time in 77 years.
GM said Wednesday it sold 8,355,947 cars and trucks around the world in 2008, falling about 616,000 vehicles short of the 8.972 million Toyota announced Tuesday.
"To me the most important thing to make GM successful," Henderson said. Any time spent on worrying about being passed by Toyota is "time wasted," he said.