GM CEO Forced Out as US Readies Autos Aid
General Motors Chairman and CEO Rick Wagoner is stepping down as head of the embattled automaker CNBC has learned Sunday.
Wagoner's resignation comes as the company awaits president Barack Obama's reports on efforts to save GM and Chrysler.
It is unclear if Wagoner's resignation is one of the stipulations for the federal government to lend billions more to GM. But sources close to the talks say tough conditions will be attached to any future aid.
President Obama will update the public on the Treasury Department’s next step in helping GM and Chrysler on Monday afternoon.
A senior White House official did not deny to CNBC that the Obama administration influenced Wagoner's departure.
Asked if the administration forced him out, the senior official replied, "'forced' is a little strong."
Wagoner has served as CEO since 2000. Under his leadership, GM has steadily lost market share in North America while becoming the dominant automaker in China, where it is currently number one.
For all of Wagoner's international success, his inability to cut losses and make GM profitable in North America is ultimately the cause of his downfall. Vice Chairman and President Fritz Henderson is expected to step in upon Wagoner's departure.
"For them to change captains right in the middle of the rapids is not something GM would have done, but now (President Barack) Obama or (Treasury Secretary Timothy) Geithner can say, we've asked them to make the ultimate sacrifice," said Aaron Bragman, an analyst with IHS Global Insight.
University of Maryland economist Peter Morici, a one-time critic of Wagoner who had called for him to resign but now believes he had "started to get it," said the administration has a "PR problem" regarding unpopular corporate bailouts.
"They are bailing out just about anybody that shows up and says they need cash. The public has grown weary of it and instead of throwing a banker to the wolves they have decided to throw Wagoner to the wolves," Morici said.
No Word On Successor
There was was no word from the government or others with knowledge of the situation on the timing of Wagoner's departure or who would replace him. Fritz Henderson, GM's chief operating officer, is the No. 2 executive at the automaker and widely considered to the leading internal candidate as Wagoner's successor.
Obama last week cited mismanagement "over the years" for some of the auto industry's severe financial problems, a point that stung Wagoner since his counterparts at Ford Motor , Alan Mulally, and Chrysler, Bob Nardelli, are relative newcomers brought in from outside the industry. GM has lost about $82 billion since 2005 when its problems began to mount in the U.S. market. GM has lost about 95 percent of its value since Wagoner took over as CEO.
Wagoner was in Washington on Friday to meet with the White House-appointed task force on auto restructuring. Obama is expected to announce that panel's recommendations on Monday.
Together, GM and Chrysler have asked for another $22 billion in government loans to ride out the weakest market for new cars in almost 30 years. Ford, which is also struggling, is not seeking federal help.
Obama said earlier Sunday that GM and Chrysler have not done enough to save themselves since receiving a $17.4 billion bailout in December. "They're not there yet," Obama said in a taped interview on the CBS-TV news program "Face The Nation."
As confidence has grown that the White House will not push the car companies into bankruptcy, it has also become more difficult to clinch cost-saving deals both GM and Chrysler need to reach with creditors and the United Auto Workers union.
Obama said the automakers had more work to do to win concessions from creditors, labor and other groups. "We think we can have a successful U.S. auto industry. But it's got to be one that's realistically designed to weather this storm," Obama said, stressing that all parties must sacrifice.
GM and Chrysler have won pending contract concessions from the United Auto Workers intended to bring factory labor costs in line with those of Japanese automakers led by Toyota Motor that have operations in the United States.
But GM and Chrysler have failed to meet other targets set for them by the government in December. In particular, talks intended to cut debt at both companies have failed to produce results over the past six weeks.
—Reuters contributed to this report