Things are really really bad at GM

[WWI Flying Ace]

What a depressing thing this is...

GM reports net loss of $2.5 billion, more cuts and asks for help - Autoblog

Well, if GM goes down the tubes, the only good thing I can think of is that I don't have to wait until the end of my warranty to get mods in the engine...

[Fformula88]

Not to worry, I am sure the GM perpetual motion machine will be out soon to re-write the laws of physics and be infinately efficient.

GM isn't going away anytime soon. Worst case scenario, they file for Chapter 11 reorganization to break up union contracts and allow them to really downsize their workforce and legacy obligations to help balance the books. I do not see them "going away." Their global operations are too strong (and profitable if you take out the North American operations).

[LazyEye]

If anything, someone will buy em

[Koobie]

Originally Posted by Fformula88 Not to worry, I am sure the GM perpetual motion machine will be out soon to re-write the laws of physics and be infinately efficient. GM isn't going away anytime soon. Worst case scenario, they file for Chapter 11 reorganization to break up union contracts and allow them to really downsize their workforce and legacy obligations to help balance the books. I do not see them "going away." Their global operations are too strong (and profitable if you take out the North American operations).

Originally Posted by LazyEye If anything, someone will buy em

I think C11 should just go ahead and be filed. They really need to disassemble the UAW presence along with their "golden" health care if they want any chance of survival. The days of the $70k assembly line worker are over.

[kwtoxman]

I'm not feeling a lot of sorrow for GM right now. In addition to all the standard responses

-they built a product line for short term profit not caring about where the market would inevitably shift (the domestics actually seriously fought against and spent millions in lobbying the US government against raising the fuel economy standards (CAFE) over the last many years )
-they only have a few cars with half-decent quality (really only the new malibu and cadillac score well on the new car quality surveys)
-they don't respond to customer concerns
-their dealer network has many many more poor dealers than good ones (what can you say when dealers have been bending quarter panels on new solstices everywhere in north america)

I also find my most recent personal experience with the solstice to be lacking. The car was rushed to market without enough quality control. The 06 solstice got an abysmal quality survey rating. My 07 GXP has some dubious crap it in. The door strikers are as cheap as you can make them. The top has had multiple parts replaced/updated because of issues. Dealer service has been terrible (see my previous posts). The door handles suck. The rear diff was a problem for many people for a couple of issues. Even worse for us people, the initial quality surveys out there average 3 years of the car model.... So any significant improvements in quality won't show up on these surveys until the bad years are removed from the average. And all of this will taint the perception of the car.

So sitting back now I find that my solstice here in Canada is doing terrible for resale. The car was majorly overpriced in Canada. About $9K more expensive here. I've seen new 07s GXPs going for $10K cheaper than MSRP. Guess what that does for used resale values. Even super low mileage used cars will take a notably larger hit. The quality surveys kick the resale value too. As near as I can see from watching the resales is the car isn't selling with much enthusiasm.

So should taxpayers shell out more money for GMs (and the other domestics) woes? It has been on the new quite a bit today. One analyst brings up what I think is a very valid point. Why give more money to a company that is producing vehicles that no one wants to buy? In Canada Ontario has given hundreds of millions of $$ to auto companies in the last couple years. It hasn't helped obviously. So should taxpayers throw more money at it? Throwing good money at bad?

Don't even get me started on the frustration I have with seeing disparity of pay. GM assembly line workers with high school education get paid like princes for no special skills or education. I have a specialized post grad degree and a half decent job and many of these GM assembly line workers make more than me.

Its a sad state. I've never owned anything but domestic vehicles, yet I feel this way. That is a scary thing for domestic auto manufacturers to consider.

It's too bad I didn't wait. I found out today I could buy an 08 F150 for $12K off MSRP right off the bat. At a minimum. With that I'd get a better deal and a vehicle with better reliability (or at least the perception of better reliability from the initial quality surveys, which is most important).

[bigh4harleyd]

and they were in talks about buying part of Chrysler, guess that goes on the back burner

[WoWwii]

It's not just the Solstice that have come down in price for last years model, here in Calgary, you can get a loaded 08 GXP for 27,999, even the 09's you can get up to 6k off.

[King-Oka]

Originally Posted by WoWwii It's not just the Solstice that have come down in price for last years model, here in Calgary, you can get a loaded 08 GXP for 27,999, even the 09's you can get up to 6k off.

Sounds like a smokin deal. Maybe I should buy a couple.

[Fformula88]

Originally Posted by Koobie I think C11 should just go ahead and be filed. They really need to disassemble the UAW presence along with their "golden" health care if they want any chance of survival. The days of the $70k assembly line worker are over.

I think they are scared to file for C11, due to public perception. They don't want to be seen as a failed company because they think that will scare away even more potential customers, and thus costing them enough business as to really jeopardize their ability to emerge from C11 ok and intact. Today, Wagoner said they will do anything and everything to try and avoid bankruptcy.

Thing is, I don't see where they can avoid it unless the economy turns around fairly quickly... and right now that would be wishful thinking.

[kwtoxman]

It keeps coming. It seems GM and the domestics are expecting the $25 billion bail out announced a few weeks ago as being approved and now want another $25 billion. Wow. Check out this article

reportonbusiness.com: Fearing worst, GM pleads for aid

The comments on the story are a huge. There is no love lost at all with the domestics. With that response it makes me wonder if any amount of money would make a difference.

Obama said today the auto sector is the backbone of america. Sounds like a further bailout is coming. IMO a further bailout will happen, but it will be a bandaid in the end. Politics. It will probably be better for the president to subsidize the problems and slowly have the economy adjust to the new paradigm rather than deal with the painful medicine all at one. After all he will be a first term president looking to be re-elected. Unfortunately taxpayers will subsidize this vision. And long term change always costs more in the end.

[Rusty]

My view: They're going after any easy money they think might be available instead of weathering the current financial storm like the rest of us. Banks got a 'bail-out', let's see if we, GM, can as well. I hope they don't, but the next Pres. might spread our wealth in their direction.

As per previous posts from Canada; I'm sure glad I don't live up there. My GXP has been a wonderful car and my dealers are excellent.

[chuckdoc]

There is no way GM should be bailed out. I love my Solstice but it is made with really really crappy parts. I have had so darn many things break and it is really frustrating. Add to that a horrible dealer network.

People just will not buy GM cars like the old days, even when the economy returns. Management had made decisions to buy the cheapest parts they can find and they killed any reputation they had. If a GM car was 500 bucks cheaper than a import, must people would pay more money for long term reliability.

I have actually had more things go wrong with my solstice than my Jaguar and that has a crappy reputation for quality.

It is not the long term cost of owning a GM car but the dificulty in time management with multiple trips to the dealer.

For Gosh sakes, please let them die. It is not really an American company with so many parts being made in Mexico and China. Toyotas and Hondas are assemblied here so there are American jobs with them.

Add to this the Chrysler bail out or merger and I just go nuts. On most financial savy peoples list for the worst CEOs is Bob Nardeli. He destroyed Home Depot and they gladly paid him millions in severance to get rid of him. (personal comments from founder of Home Depot), who do you think hired him? Chrysler.

A merger between GM and Chrysler would be akin to two drunks trying to hold each other up.

I say let them go and something else will take their place. Heck, if the dolar keeps getting stronger, some American group could buy out Honda or Toyota.

Chuck

[AdamVIP]

GM has to be bailed out. I dont think people are seeing this. GM is so involved in the economy of the US if they fail it will probably be worse than if a major bank fails. They literally spend billions of dollars a month buying things. These things are raw materials, electronics, LABOR. If GM folds all that cash flow dries up with it. Beyond the immediate costs you have all the support industries like our beloved aftermarket and supporting vendors. Besides Walmart GM is probably the largest labor force in america. If GM closes we will be in another depression.

Its not a choice of whether they should bail out GM or not. They have to. Its simply how much and what strings the government can attach to the money.

Unfortunately I think GMs size alone is a huge downfall. With all the money they have tied up in things its vary difficult to just up and change your business model. Unless they find away to trim their excessive fat and bloated spending we are just hitting the snooze button.

[Moose GXP]

Originally Posted by Fformula88 Not to worry, I am sure the GM perpetual motion machine will be out soon to re-write the laws of physics and be infinately efficient. GM isn't going away anytime soon. Worst case scenario, they file for Chapter 11 reorganization to break up union contracts and allow them to really downsize their workforce and legacy obligations to help balance the books. I do not see them "going away." Their global operations are too strong (and profitable if you take out the North American operations).

Take a look at the Global results posted yesterday. Only one global region made a small profit, GMLAAM. All others took a loss.

[kwtoxman]

Some would probably disagree Adamvip. The domestics will not disappear if they aren't bailed out. At least not literally. A C11 will cause lots of pain, but as others have mentioned, reorganized companies will emerge. IMO the large short term pain of not bailing anyone out will alleviate the more significant long term pain of the status quo with bailouts. The labour force and supporting industries will not disappear. There will be new partnerships and business cases.


These different points of view are an interesting discussion, all with good points.