Our top story this week follows the continuing conflict between recently restructured automakers General Motors and Chrysler and some 2,000 jilted dealerships. The U.S. House of Representatives voted to force Chrysler and General Motors to reinstate dealers that were closed during the car companies’ bankruptcy restructurings. The measure was included in a $24.2 billion House Financial Services and general government appropriations bill for the upcoming year and was passed by a vote of 219-208. The dealership provision of the legislation would prevent Chrysler and GM from receiving money budgeted for reorganization if they continue to shut down dealerships. In a report Thursday from the Detroit Free Press, Chrysler claims it could face liquidation if forced to reinstate the 789 dealers it cut from its ranks. GM told Congress it has spent about $600 million on wind-down agreements with the 1,300 dealerships it cast out.
In other news, CARQUEST and Gates Corp. have announced a new partnership that will create a CARQUEST/Gates Fleet Solutions Sales Force to represent CARQUEST fleet and heavy duty product lines under the CARQUEST Fleet Solutions Division. The CARQUEST/Gates Fleet Solutions Sales Force will also continue to represent CARQUEST belts, hose, wipers, caps, thermostats and hydraulic products in addition to other current responsibilities.
Also this week, we announced a new addition to the highly competitive brake pads category in the North American aftermarket. Brazilian brake components maker FRAS-LE has announced the launch of its new line of brake pads for the North American market. The line of aftermarket brake pads consists of four different products with formulations developed specifically for each application, manufactured under FRAS-LE’s Positive Molding Technology process. Adhering to the company’s environmentally responsible guidelines, each line consists of asbestos-free raw-materials.
Also in the manufacturing sector, the twice postponed auction of Delphi’s assets is scheduled to take place today. No word yet on who the winning bidder will be. Two outlets are vying to acquire the business – lender JPMorgan Chase submitted a late, pure credit bid for the business, potentially usurping the groundwork that private equity firm Platinum Equity put in place over the past several months. JPMorgan’s pure credit bid would enable the company to buy Delphi with the $3.6 billion it is owed by the parts supplier. Earlier this week, the majority of Delphi’s creditors voted to reject the supplier’s plan to be acquired by Platinum Equity. Platinum Equity had been in talks with Delphi’s former parent company, General Motors, to acquire the parts supplier with $2.5 billion in partial funding from the automaker. Delphi later announced that its creditors agreed to withdraw their objections, and support Delphi’s reorganization plan, regardless of which offer is accepted by the bankruptcy court.
Rounding out our top stories this week comes news of an internal reorganization at French parts supplier Valeo. In order to enhance profitability and improve the group’s efficiency given the growing globalization of its markets and customers, Valeo has restructured its business into four new business groups, integrating existing product families and domains. The four new business groups include: Comfort and Detection Systems, Powertrain Systems, Thermal Systems and Visibility Systems.
