Is the end nigh for GM?
Discussion
Hi,
I was reading The Times today and in the business section, there was a short article on how GM's problems have shown no signs of improving. So much so that they could go bust by next year if they don't get any outside help (gov't, or another source). The article also went on to mention that the merger with Chrysler hasn't gone ahead, Ford have similar problems, and so on. An interesting fact was how GM need $50 billion but the US government has set aside $25 billion for the US carmakers to invest in green technology.
A little pointless that purpose is, if GM/Ford etc do go bust! Bush was keen straight away to invest $700 billion (if memory serves me correctly) in the banks when the whole banks going bankrupt thing happened last month/a few months ago. Obviously banks in their state can't lend money to the big 3. GM's problems have been going on for years, and like the banks, are down partly to the fault of management. But the gov't doesn't show any interest in this, and if the big 3 do go bust then any effort to boost the economy will be 100x harder with loads of unemployed skilled and non-skilled workers, suppliers losing big contracts, etc. It would seem like the US gov't doing all it can to revive the economy but not helping the big 3 would be like me someone for an exam, but purposely not turning up to that exam. Of course, the US gov't helping the banks would also indirectly benefit the big 3.
It sucks that this has to be the case now, because the Corvette has shaken off all its stereotypes and everyone (even those who are ignorant) have noticed what this car can do. So many car makers and enthusiasts of other marques have been put to shame.
Also, in a completely unrelated matter, how can the GT-R be a contender for eCOTY? The car isn't out in the UK yet, and Evo say it can't be beaten for value for money. The C6 Z06 is a very similar price, and it hasn't been in development for so many years as the GT-R! There was very little lag time between the end of production for the C5 (Z06) and the start for the C6 (Z06). Even then, the GT-R is a pig and for a car in development so long, I am underwhelmed. It reminds me of a KitKat chunky. Even the ZR1 is priced so much cheaper than any equivalent Ferrari. If these cars were priced the same as Ferraris, etc, and with more expensive components to justify the price, said rivals would be in even more trouble.
I was reading The Times today and in the business section, there was a short article on how GM's problems have shown no signs of improving. So much so that they could go bust by next year if they don't get any outside help (gov't, or another source). The article also went on to mention that the merger with Chrysler hasn't gone ahead, Ford have similar problems, and so on. An interesting fact was how GM need $50 billion but the US government has set aside $25 billion for the US carmakers to invest in green technology.
A little pointless that purpose is, if GM/Ford etc do go bust! Bush was keen straight away to invest $700 billion (if memory serves me correctly) in the banks when the whole banks going bankrupt thing happened last month/a few months ago. Obviously banks in their state can't lend money to the big 3. GM's problems have been going on for years, and like the banks, are down partly to the fault of management. But the gov't doesn't show any interest in this, and if the big 3 do go bust then any effort to boost the economy will be 100x harder with loads of unemployed skilled and non-skilled workers, suppliers losing big contracts, etc. It would seem like the US gov't doing all it can to revive the economy but not helping the big 3 would be like me someone for an exam, but purposely not turning up to that exam. Of course, the US gov't helping the banks would also indirectly benefit the big 3.
It sucks that this has to be the case now, because the Corvette has shaken off all its stereotypes and everyone (even those who are ignorant) have noticed what this car can do. So many car makers and enthusiasts of other marques have been put to shame.
Also, in a completely unrelated matter, how can the GT-R be a contender for eCOTY? The car isn't out in the UK yet, and Evo say it can't be beaten for value for money. The C6 Z06 is a very similar price, and it hasn't been in development for so many years as the GT-R! There was very little lag time between the end of production for the C5 (Z06) and the start for the C6 (Z06). Even then, the GT-R is a pig and for a car in development so long, I am underwhelmed. It reminds me of a KitKat chunky. Even the ZR1 is priced so much cheaper than any equivalent Ferrari. If these cars were priced the same as Ferraris, etc, and with more expensive components to justify the price, said rivals would be in even more trouble.
TBH I feel in the long term it'd be good for the industry if GM fell over. Massive overproduction of cars no one has asked for is hurting margins (hence costing jobs) in the sector of the automotive industry that is profitable - the aftersales and aftermarket business. Due to the endless flood of new cars coming ito the market for which there's no natural demand (hence big rebates, putting cars into the market as rentals for next to nowt etc.) residuals have fallen to a level where two year old Mondeos are witten off after a modest prang. We have become a throw away society and try to coverthings up by stating 'yeah, but new cars are greener'.
Corvette would be quite viable as an independent business - unlike most parts of GM.
Corvette would be quite viable as an independent business - unlike most parts of GM.
TVR Moneypit said:
Could Ford or GM really go bust? Would they be allowed to?
I have always thought it would be inconceivable for political reasons, but at the rate GM in particular is burning cash, even the US government may find themselves at a loss. After having propped up the banking sector using hundreds of billions of taxpayers' money... somewhere it has to end or they'll effectively end up with a planned economy, Eastern Bloc style. 
The viable parts will undoubtedly go on as separate entities or sold off to other concerns. GM Europe may have the tide against it ATM but it's not a basket case (although they could do with selling off Saab). Corvette is viable as a small US-based, globally operating business unit, Cadillac should contract to being a strictly American brand but then would probably survive on its own, too. The finance part of the business - GMAC at all - may have to merge with other institutions in the finance world, the light-truck/SUV-business may have to pull out of the consumer market altogether and concentrate on commercial-grade vehicles.
Ford at least has the European part of the operations running quite nicely, and hence the benefit of the design and engineering know-how that consistently turns out class leading vehicles in the small/medium car segments - something GM sorely lacks. Not that Opel/Vauxhall is bad - it's just that the last time they led the pack was somewhere in the mid-Eighties and they don't really seem to have a stong engineering voice against the bean counters who think that twist-beam rear axles are still perfectly acceptable for a new 'premium' mid-size car product (new Saab 9-1/9-3), let alont their bread and butter Astras. Ford OTOH have learned their lesson from the Mk5 Escort and since then major on cars that 'feel' right. Which will become more and more important as customers want/need to downsize their cars in the USA.
All in all I see Fords current state more as transitory while that of GM and Chrysler has all the marks of being terminal.
All in all I see Fords current state more as transitory while that of GM and Chrysler has all the marks of being terminal.
5 USA said:
The likelihood of Uncle Sam letting either Ford or GM go bust is IMO zero. Or at least no greater than the chances of Gordon Brown sitting back and watching Abbey or Halifax go bust.
But how many billions can they afford to prop up basically unviable businesses in the current climate until the taxpaying public cries 'no more'? At the very least they need to see deep and fundamental changes in the way the businesses are being run before pumping more many into a black hole. And that will mean job losses either way.
TVR Moneypit said:
5 USA said:
Chrysler - now that's a different story altogether. Shall we say more like MG/Rover...
Wouldn't they just get swallowed by one of the other two?I think 900T-R is making some interesting points but some key factors are being overlooked here. On the point of selling off Saab, how could you?? Who'd buy it, why would they buy it and what would they get that has any value?!
As for the GM Chyrsler scenario, Cerberus bought Chrysler to try and turn a quick buck. Their hope was that with their financial expertise they'd be able to re-fund the company and with this new money pot put some quick fixes in place then sell it on again, or float it. This backfired rather painfully leaving them in the leaderless state they are in now, with no genuine product development and lagging so far behind GM it's untrue. Even Ford are off the pace of GM in keeping up with the times. As for the GMAc deal, the whoole concept was that Chrysler is saddled with debt and Cerberus owns 51% of GMAC, therefore if GM took on Chrysler and its debts Cerberus would give GM back its controlling stake in GMAC. However if you look at the potential toxic debt in GMAC I don't see why you would ever want to enter into such a deal.
As for the GM Chyrsler scenario, Cerberus bought Chrysler to try and turn a quick buck. Their hope was that with their financial expertise they'd be able to re-fund the company and with this new money pot put some quick fixes in place then sell it on again, or float it. This backfired rather painfully leaving them in the leaderless state they are in now, with no genuine product development and lagging so far behind GM it's untrue. Even Ford are off the pace of GM in keeping up with the times. As for the GMAc deal, the whoole concept was that Chrysler is saddled with debt and Cerberus owns 51% of GMAC, therefore if GM took on Chrysler and its debts Cerberus would give GM back its controlling stake in GMAC. However if you look at the potential toxic debt in GMAC I don't see why you would ever want to enter into such a deal.
Edited by mitch_ on Sunday 9th November 13:43
mitch_ said:
I think 900T-R is making some interesting points but some key factors are being overlooked here. On the point of selling off Saab, how could you?? Who'd buy it, why would they buy it and what would they get that has any value?!
Simple - in the past 18 years, GM has comprehensively shown that they have no f
king clue whatsoever about what to do with it, yet a hopelessly outdated product portfolio, brand whoring by putting Saab badges on a beautified Subaru Impreza and a Chevy truck, putting a new GM person in the director's seat every few years, general under-investment and mismamagemnt haven't succeeded in killing it off. Over the past five years the same concern has sunk comparatively huge amounts in the re-re-relaunch of Cadillac in the same market segment in Europe through the Dutch Kroymans organisation who put a fair number of heavyweights on the case, yet its sales volume in Europe is a tiny fraction of Saab's. The conclusion must be that despit all Saab's intrinsic brand vaule on these shores in an order of magnitude higher than that of Cadillac.
And of course, all of Europe's bread and butter badges have long found out it's nigh-on impossible to sell cars from the upper-mid segment onwards with their own badges. For a large non-German manufacturer in Europe, let alone OEMs from the emerging economies, acquiring the Saab brand may be the only available and viable access ticket to the premium market where margins are still somewhat bearable.
Edited by 900T-R on Sunday 9th November 15:03
Old folks in the U.S. still identify with Buick but then you could argue that there is replication there with Cadillac. As for Saab, there is too much bad history stored up there now. It's quite simply dead. I have no idea what 900T-R things there is left to salvage of it. It has no discernibly good product, no truly loyal customer base, no direction and survives rather painfully off pre-registered cars. I think its time to call it a day there. Afterall Saab doesn't really sell sod all outside of Europe. I think one might be forgetting that Cadillac sells rather alot in the U.S. As for the marketing and resource put into Cadillac in Europe versus Saab, I think you'll find it's nigh on bugger all.
mitch_ said:
I think one might be forgetting that Cadillac sells rather alot in the U.S.
That's why they need to concentrate on the USA. Trying to sell us Caddies (again) has been a costly mistake. We don't want Caddies. Cadillac reminds us of huge, vulgar pink things with chrome and tailfins and suspension nicked from grandpa's bed. Caddies are the things that Elvis ans Lee Towers (Dutch singer with a mock Amurrican accent and erm, wooden mimics on stage) drive, not something you can take your business partners out in for lunch. In Europe, Saab still is a legitimate premium badge even though the cars haven't been all that for a decade or more, something that Cadillac will never, ever achieve here. After all, history still counts for something here.
Le Man said:
It doesn't matter how many SAAB badges you glue onto a Vectra.
Underneath, its still a Vectra.
Um, at least the Vectra and saab 9-3 are stucturally different cars - related in the way a Jag X-Type and Ford Mondeo are, but that's it. Underneath, its still a Vectra.
But erm, what's with the Cadillac BLS? Aside from a few panels that are more angular, and softer suspension it is a Saab 9-3 underneath. They even roll off the same production line.
Must I really search for a copy of Automotive News Europe to tell you the relative sales volumes of either? Nothwithstanding the fact that in a last resort bid, Kroymans has priced the entry level BLS eight thousand euros lower than the corresponding 9-3 version?
And that's Cadillac's 'volume' product in Europe...
Le Man said:
You're right about history though.
Google Dewar Cup.
Relevance?Google Dewar Cup.
Sorry, but anyone who thinks that the umpteenths unsuccesful re-relaunch of the Cadillac brand in Europe is anything else than a symptom of the plain ignorance within Detroit head offices about every market outside the US and simple testosterone management, is seriously deluded. GM had but one halfway viable ticket to the European premium market and blew it.
Saab OTOH didn't do half bad in the USA before GM. Google "Robert J. Sinclair".
Edited by 900T-R on Monday 10th November 07:37
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