General Motors Defaults, Idles Plants
General Motors is projected to default on its next bond payment—the last before the June 1st government-imposed restructuring deadline. Next freeway exit: bankruptcy.
From the Wall Street Journal:
GM Chief Financial Officer Ray Young - who told reporters that the auto maker had no plans to meet the June 1 interest payment - may have done investors a favor by reminding everyone of the harsh reality ahead."People should be getting the sleep out of their eyes and seeing it's over," said Marilyn Cohen, president of retail bond investment manager Envision Capital. "I would imagine they're going to file any minute...Not making a payment - it's going to show them that this time, they mean it."
Later this week, GM will also announce its plans to idle fifteen plants in North America for at least a week (but likely most of the summer) and going through with other planned cutbacks sooner than originally planned.
As GM Plans Bond Payment Miss, Last Vestiges Of Hope Fade Away [WSJ]
GM Said to Idle 15 Assembly Plants in May-July Period [Bloomberg]
GM Said to Speed Cutbacks to Lower Break-Even Point [Bloomberg}
Photo: JM3
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Comments:
Why wont they just die already?
This gives them a little more momentum going up against Comcast in the next round.
Threat to our national economy aside, this is good news for my bracket.
My Saturn lease is up in May and I plan to buy my car outright for 6500 versus returning it and likely paying a bunch of fees, including the cost to repair the damage after an accident.
I wonder if they'll be willing to negotiate on that 6500 versus me returning it and it sitting on the lot for who knows how long - it being in a car accident could dissuade buyers.
A friend of mine is car buying. Last week she went into a Ford dealership and the smug salesman told her there was no way he'd go below sticker on any of their cars.
She drove over to Mazda and bought a new car there.
Yeah, it was Ford not GM, but I am floored that any car company, especially a domestic one, would refuse to go below sticker for a new sale right now.
Uh oh. Maybe I SHOULD listen to one of the two calls I receiver everyday to extend my car's warranty....
@runswithscissors: The problem is dealerships are not owned by the companies.
Also sometimes its just where your at. A lot of the dealers here in Michigan are willing to make deals to get cars off their lots.
@yzerman: They've gotta know the condition their company is in though. And car sales are hurting. I can't imagine a salesman would be dumb enough to not go below sticker, especially when nobody in the history of ever has paid sticker price on a car. (save those who put deposits down for Priuses or whatever)
@runswithscissors: Soooo...She didn't like what the Ford salesman had to say...
...and ended up buying a Ford anyways.
Sure showed them!
All that money we threw away on GM should have just gone to retraining and job creation for the people being put out of work.
Its a shame. GM finally builds good cars again. They look better than they've looked in 25+ years (or just about anything ever built in Asia), they are more reliable than ever, and they aren't just competitive, but dominant in a racing series that doesn't suck (ALMS).
That'll show 'em! And by 'em, I mean us! GO USA! WooOOoo
@TheGuinnessTooth: Really? GM is building reliable, not-shitty cars that look good? What color is the sky on your planet? Ours is a nice shade of blue most of the time.
@TheGuinnessTooth: Whats a real shame is GM is only now making vehicles like that. They should have been doing this years ago.
You don't get to hand in your project three weeks late just because you "did a good job on it."
This makes sense. If they aren't selling cars, why keep piling them up?
GM is whacking thousands and thousands of jobs so they can look good to a government ... that's trying to contain job losses. Non sequitur!
@TheGuinnessTooth:
auto racing is hardly a thing to judge a business model by, and considering what a drain on resources it is I am frankly suprised it's still in existance and didn't die off as a fad.
GM had plenty of oppertunity to become competitive, they chose to do their own thing and hope the customer agreed. They chose wrong.
@Stephanie Haller: It can't hurt to ask. Offer them $3k, see if they take it. If not, threaten to walk away.
My own take is that we should be looking at what the rank-and-file GM workers are doing since this whole debacle started accelerating.
I would have been mailing out resumes and interviewing like crazy in anticipation of the company imploding...
@runswithscissors: I had a dealership here offer to sell me a used car for 27000, but I walked out and said i wanted to research it on the web. It was valued at less than 22,000. Whats going here with these dealerships?
We need to allow corporate darwinism to do it's thing. If a company isn't strong, it dies. The market will support a good company, and allow a bad one to fade into memory.
@downwithmonstercable: Or say companies like MINI that sells at sticker everytime. In fact its a big deal to find a MINI dealer willing to go down to sticker.
@Laura Northrup: I get them at work as well. Sadly, I must answer every call on my cell, as I stopped checking my voicemail almost 2 years ago.
@valthun: More info is needed; if it was a Cobra, or something similar there's a good chance they wouldn't go below sticker. Chrysler is in a big hole, but try getting a Challenger for less than sticker...
said it once, i'll say it again.
well, michigan, you had a good run.
[mind you, this is coming from someone whose father will likely be unemployed in a year due to this. egad.]
@The-Lone-Gunman: the shitty thing is that most line workers won't really have anywhere else to turn. most jobs require a certain skill set, and i can't think of any that overlap with being a factory worker.
my hope would be that they took the buyouts they were offered... i know ford was offering their folks some damn nice money to get out, i think gm was as well...
@Kyle: They really aren't bad cars anymore, you know, after 25 years of shooting their brand image to hell with shitty cars that made this happen.
My old reliable Subaru is in the body shop after one of my neighbors hit it while parked out on the street. their insurance company supplied me with a Chrysler (which I realize is not the same as GM). Yesterday it just randomly died while driving down the street.
I guess that is what is happening to the company too... except for the random part.
@sam-i-am: A friend at work's two year old Subaru's tranny went out twice. As long as cars are made by humans (even humans building and programming robots to make them), there will be cars that have issues.
@catnapped: Ford never owned a majority, but they owned enough to have controlling interest. Ford still owns an appreciable amount. Plus, it takes years -- even decades -- to make a car line diverge. So he's right, for all practical purposes, there's not a lot of difference between Mazda and Ford.
@TheGuinnessTooth: You're right, despite what the low IQ crowd above me says (not all of you guys).
Yeah, GM makes good looking, reliable cars. Not Toyota/Ford/Honda quality, but they beat crappy (but nice looking) Volkswagen and still-improving Hyundai.
@balthisar:
Good looking? Maybe
Reliable? Questionable
But the crux is quality and that alone is reason for them to fold.
They had all the power and muscle to make the best cars on the market for the right price, with quality workmanship. They chose instead to just send out the clones of their own designs under multiple emblems and stick to gas hogs and grocery getters instead of adapting to a more economical model.
GM is toast.. I would of been sending resumes weeks ago.. As for the workers.. It's a joke.. Up here in the Great White North the great employees of the CAW refuse to accept less money.. They will be out looking for a job soon as Chrysler Canada lying in their deathbed like GM..
Doesn't it seem a bit presumptuous to say GM "defaults" even though they technically haven't defaulted until June 1st?
Granted, they're planning to default... but they could technically change their mind.
and WHY is this not ALL OVER the major news wires? Oh wait, Sara Palin's daughter's ex-fiancee & the Perez Hilton/Miss California are SO much more pressing...
This is the bill coming due for GM basically saying "up yours" to unhappy customers over the years. Despite what you may have been led to believe,their cost to build a car is not that different from Nissan,Toyota or any other company. The problem is that the value is percieved to be less,so they can't sell them at a profitable price.
All of you GM workers (the ones that can read,anyway) make sure that you take a long last look at a dying way of life- Auto manufacturing by highly paid American workers. Because when GM goes Tango Uniform,your lives are going to change forever.Ford will get wage givebacks or go C11,Chrysler is toast and Hondatoyosan are already more productive and competitive.
Oh,by the way, it will make me feel a lot better if the battalions of GM white collar deadwood actually find that there is no market for their "skills". They are about to get a wake up call that they will not soon forget.We customers begged , BEGGED you to listen to us and you were fat and happy and arrogantly said to go somewhere else if we didn't like it. We have. Your day is here,and don't expect any sympathy from the ones you have wronged.
I hope they do go bankrupt, I want to see the wailing and whining that erupts from all the people that were cheering their demise when all those business GM supported fall too. Enjoy the the fruits of your populism.
Very sad all the way around.
The GM problem is just the start of it, folks. People aren't buying cars, period, regardless of make. No loans for cars and job insecurity = nobody in their right mind is gonna buy a new car, be it GM, Toyota, Honda, whatever. This is only the start of worse things to come.
Well, Obama has put the nail in the coffin. Why would I buy some 2 person golf cart from GM when I could buy a truck from Toyota?
Ok, get what you want by GM going out of business. Do you realize what is going to happen as a result of another 2.5 million jobs going bye-bye?
Not to mention all the other jobs that will be lost as a result of suppliers and whatnot not having orders to fill from GM?
This is a Pandora's box, and it is about to be opened. Brace for impact because this is gonna be unlike anything you have ever seen before.
American cars FTW!(sarcasm)