• by Karl Greenberg , June 1, 2009

The message on Monday from both President Barack Obama and General Motors CEO Fritz Henderson was that the company remains "open for business." Obama, who spoke from Washington minutes before Henderson spoke in New York, insisted that the "New GM" that will emerge, phoenix-like, from the ashes of bankruptcy, will not be a company controlled by the government. He also said consumers have no reason to fear setting foot in GM dealerships.

Monday's events are surreal for a company that once constituted over half of all car and truck sales in the U.S. and in the 1970s employed over 600,000 Americans. Through April of this year, GM's sales were off 45%, compared to the first four months of 2008. Chrysler's volume was off 46%.

The U.S. auto industry, as a whole, was down 37%. With the bankruptcy, GM will divest itself of Saturn, Pontiac, Saab and Hummer and one-third of its 6,000 U.S. dealerships over the next year. Also on Monday, GM said it would cut U.S.-based assembly, power-train and stamping facilities from 47 last year to 34 by the end of 2010 and 33 by 2012. As part of the bankruptcy filing, GM will sell its assets to a new entity that is 60% owned by U.S. taxpayers. The "New GM" is supposed to emerge from bankruptcy in one to three months. Both the President of the U.S. and the one of GM said the new company would end up "leaner and meaner."

Henderson, who said the new company would market world-class vehicles, conceded that GM had been content to execute successful launches only occasionally. "We need to make sure that all our vehicles are world-class. Every launch must be an outstanding car or truck."

Henderson said that GM's agreement with the U.S. Treasury and governments of Canada and Ontario "provide a fast-track plan to make a leaner, quicker customer and product-focused company," adding that the "New GM will be built from strongest parts of the business, including the best brands, finest products, less debt, and fully competitive labor costs." He said the new company would also provide better marketing and R&D support of its brands and products.

Obama said Chrysler's smooth transition through bankruptcy suggests that GM will do likewise. "Chrysler is poised to complete its alliance with Fiat, paving the way for a new Chrysler to emerge from bankruptcy in the next few days," he said, adding that proof that bankruptcy will not keep consumers out of dealerships is in the fact that Chrysler's sales in May were better than those in April.

"It will take more time for GM than Chrysler. But Chrysler's extraordinary success renews my confidence that GM will emerge [a successful company]." The President also gave a nod to his government-backed warranty plan, announced in March, meaning consumers should not avoid GM dealerships during the 30- to-60-day bankruptcy period because of coverage fears. "If you are considering buying GM car in this period your warranties will be safe," he said.

Said Henderson, "GM remains open for business ... to those of you have never tried GM or tried and given up, we look forward to earning your business and trust. Give us another chance. The GM that let too may of you down is history."