GM: Bankruptcy Is "Probable"
The New York Times DealBlog liveblogged the GM conference call. We're glad they did, because just reading their recap is depressing enough for us.
The automaker said that bankruptcy wasn't a foregone conclusion, but that it is more probable than in the recent past.
"Today it's more probable that we would need to resort to a bankruptcy process. But there's still a possibility and an opportunity for it to be done outside of a bankruptcy," said Fritz Henderson, the chief executive of General Motors.
42% of GM dealers will close, probably in the next few months, if not longer. There was one bit of bright news — GM has found two bidders for Hummer. There was no mention of the fate of Saturn and Saab.
Only three weeks left before the government deadline! Do you think GM can get its act together and avoid bankruptcy?
Live-Blogging the G.M. Conference Call [NYT]
(Photo:alyates44)
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Comments:
The only thing that will save domestic auto makers is if they come up with even more models. Having 100 models, most of them just rebadged versions of other cars, simply isn't enough for most consumers. We need at least 10 different large SUVs, 10 different medium, and 10 small. We need 15 versions of a small car, 15 medium and 15 large. The only way they are going to pull out of this downward slope is if they focus on delivering several hundred versions of cars with varying degrees of reliability and build design, rather than focusing on several well built cars that everyone would want to buy. Not!
And let's face it: cars have gotten seriously complicated and expensive.
We need a new Beetle for the new millenium.
Maybe that little Indian car might inspire some new ideas...
No, please, let Hummer die.
The new Beetle could already be the platform.
Where's the Beetle with one of those super-clean high MPG diesel in it that VW already makes?
Where's the Hybrid Beetle?
Where's the all electric 50 mile range Beetle (Plug Bug?)
VW is missing the boat as bad as all the others.
Maybe the government could lend them another few billion?
Surely this time it will work.
Hank Paulson, George Bush, Barack Obama, and Tim Geithner might be surprised by this news but I don't think anyone else is.
Don't get rid of Saturn, please. My wife and I want a Vue or Outlook when we can afford the payments (next year).
@TCinIowa:
Oh god, not the Beetle. We had an '02 Beetle, and it was the worst POS car I've ever owned. Looks cute, but is a mechanical NIGHTMARE.
I agree that we need a new "people's car" for the new millenium. What needs to happen is that Saturn gets sold to somebody with a brain in their head. Design a new car similar to the original S-series (American made, affordable, good quality, good gas mileage, etc.), build it here, use the Saturn reputation to sell it, and bury GM in the process.
@b.k.: I think there's a significant difference between the hummer used by the military and the neon yellow ones I see rumbling down the street, driven by middle-aged men and teenage boys.
Just friggin' get it over with already!
@Saboth: Yes, but the cars are still in existence. I think they'll probably continue to sell them as long as they can, but not produce any more new ones.
@TCinIowa: I'd prefer if the "new beetle" or any VW car never be mentioned again
My wife's crappy Beetle is currently in the shop again.
You can't do anything on the new cars.. 90 dollars for a tail light bulb.......
@Jim Topoleski: With the exception of the Saabaru and the Saablazer, GM really didn't much of anything with/to Saab.
The reason I have a place in my heart for Saab is that the 9-5 is (rather unbelievably) still the same car as it was when I was in school, when I thought about getting one 7 years later, and as it is today another 6 years later. I don't think there's anything still out there being sold as new that was introduced in the mid '90s
@IamNotToddDavis: No doubt. Revelation will strike and they'll develop an entirely new business model. Their workforce will be inspired and efficient, they'll produce stylish, well-built cars, and the GM name will be transformed. Their stock price will shoot up. People will gladly pay the sticker price and in some cases will have to be waitlisted for the most desirable models.
Time to take my medicine.
@Saboth: I think they're being put on the market, but I haven't heard if there are any takers yet. I love Saturn cars, and like Jenkinsbball said, I'd love to buy one as soon as I can afford it.
Seriously. Mercy killing.
But I feel terrible for all those ppl who will join the unemployment rolls.... :(
All fun and games for you trollers until one of the thousands of ancillary companies that does business with GM has to layoff since they are not getting paid. And they have nothing with building cars.
@HiPwr: Shh.... they still think that anybody is going to buy a GM or Chrysler after they fleeced us for billions.
This needs to stop. No more money wasted on failed companies. We should all take the loss and let them close up the shop.
You know, all of this focus on GM's losses and potential bankruptcy while completely ignoring that Toyota lost more money than GM last quarter really isn't doing much to dispel the whole "Consumer Reports has an irrational love of Toyota" rumors, as unfounded as they may be...
@The_Legend: So do you think it's a better idea to continue propping up a failing company with taxpayer dollars, paying them to produce a product that people don't want at the price GM has to charge in order to pay their bloated union wages and pensions?
How is that better in the long run?
@nataku83: So what? Toyota could lose more money than GM, but people are still going to buy their cars. Not so much for GM. IMO, no automaker is really safe. When people don't have money, a new car is at the bottom of the priority list.
So I'm a troll if I disagree with you and think GM is beyond help? OK.
I hope US car industry dies a quick death. That means all of the supporting companies too. We can't drag this on forever. It's just too costly. You don't keep a brain dead patient alive, there is no point, donate the organs to the highest bidder and stop cranking up the medical bill ;)
@squinko: Renault is the likely buyer, along with a group of dealers who are footing some of the bill.
Renault is looking to bring their cars back into the US as true Renaults and not rebadged Nissans, buying Saturn is the cheapest way for them to do it because they will have the dealer base already built for them and most are independent dealers with no ties to GM and no other GM models being sold.
@mbz32190: Well, my point is that this blog is somewhat biased in the way they shit all over GM but not competitors. Plus, even before GM's bankruptcy was guaranteed, consumerist has been consistently reporting losses. It just seems to me their omission of Toyota's losses this first quarter is demonstrating some sort of bias. Also, I don't know where this idea came from that GM doesn't make cars Americans want to buy, Chevy alone sold 1.8 million cars in 2008. How is this not considered people buying GM cars?
Also, I completely agree - no automaker is safe - people aren't buying new cars right now because the bottom fell out of our fake economy. Why then all the hate for GM? Yes, they're definitely not managed as well as Toyota or Honda or Nissan, but with the incredible product improvements they've made in the last few years, they would be surviving right now if the economy hadn't tanked. Yet people are calling for their death, and stating that the company should be put to sleep? This seems pretty extreme when the poster child for the automotive industry is also hemorrhaging cash.
Sorry but business is business. If GM can't cut it, then it's time to go bankrupt. Only the strong survive and it's not like people are going to stop buying cars, they're just going to buy from companies that give them what they want. CLEARLY GM wasn't able to achieve this.
That many dealers closing would be another punch to the gut of newspapers, who depend on car ads for much of their steady ad revenue. This would disproportionally hit the smaller, suburban papers.
@mbz32190: Actually that whole lost more money thing has to deal with people are NOT buying Toyotas cars right now.
In fact I would be more worried about them if it where not for the fact that unlike the US, Japans government is willing to bend over backwards to help their auto industry and has done given them money while baring foreign auto manufacturers from Japanese soil for DECADES now.
Its so easy to say, "let the companies just die" Yet if that happens and thousands of dealers close, plants close and the local economy if smaller cities are destroyed, there will be no "do overs" or "take backs".
Then I think you will hear a different tune out of the major news media.
@squinko: Yeah, haven't you seen those Saturn commercials airing on TV nonstop lately? They're obviously trying to appeal to companies that might want to buy them out & keep them alive.
@TomCoughlin: Ok, let's say your company does business with GM that in no way is supplying car parts. Maybe you are doing IT, or construction services. Or you are a business in a GM town. That sells goods and services to people that work at GM and those other companies?
And I want to puke at the feeble comments about products that people don't want (I guess that's why Toyota lost 8 billion too), and the bloated union wages and pensions (sorry about that, union is taking those over). Thanks for playing though. Come back when you have a valid argument. Maybe you work for one of those banks that is suckling at the teat of Uncle Sam.
@b.k.: The Hummvee is made by AM General and sold to the US Military, the Hummer is a GM brand. AM General and the Humvee isn't going anywhere, but the Hummer brand is dead.
@Jim Topoleski: I just wish that Fiat had picked up Saturn/Opel instead of Chrysler. Sure, they get more dealer showrooms out of it, but at the cost of a bloated, lackluster company being strapped to their backs.
@nataku83: @mbz32190: You may be surprised to learn that GM is actually selling quite well in other parts of the world. There are GM factories in China that are running 24/7 to meet demand there. The Buick Escalade is especially popular and is perceived as a luxury import. It seems that the whole world has a "the grass is always greener" complex.
What GM needs to work on is improving consumer perception here in the US and running more efficiently. Bankruptcy may be necessary to restructure the company to these ends. It won't be the end of GM; it will just be the end of the old GM.
@The_Legend: Ha, you think they were getting paid now anyways? GM owes its creditors billions of dollars. And the recent bailout scheme just prolonged the inevitable.
The irony, as noted by Paul Ingrassia today in the WSJ-
Last week, GM reported a $6 billion loss for the first quarter. The company wants to wipe away 90% of its $27 billion in unsecured debt as part of its path to viability. But to do that it will almost certainly have to follow Chrysler into bankruptcy court. That will be the cleanest and quickest way for GM to get relief from obligations that it can't afford to meet. Beyond this, GMAC's status as a bank holding company qualifies it for government assistance that Ford's lending arm, Ford Motor Credit, can't get.
You can see where this leaves us. Ford has about $26 billion in automotive debt -- about the same as GM's $27 billion. Ford's debt is secured by its assets. And secured lenders must be repaid -- unless they happen to be Chrysler lenders and get clipped by a company bankruptcy plan that's backed by President Obama.
So Ford is like a homeowner who planned prudently and can pay his mortgage, while his spendthrift neighbors get their mortgage reduced by some new federal program.
Ford executives are probably fretting about this, but there isn't much that can be done. They already have exchanged some of their debt for equity, and might do more of that. But the bottom line is that we live in a world where wisdom can be punished and where foolishness can be rewarded.
Fate of Saturn will probably be just like Chrysler. GM will go bankrupt and whoever is buying Saturn (last I looked it was most likely Renault) will get it for MUCH cheaper than it originally was going to be sold to them for.
Saabs toast though, not even the Swedes want it.