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davepamn davepamn
 

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M$1.00  Funded By Mahalo ? |  April 27, 2009 02:25 PM

Will GM be able to avoid Bankruptcy?

1. GM needs to swap $27 billion worth of bonds for GM stock. GM is offering bondholders 225 shares for every $1,000 it owes. If GM bondholders accept the offer they will own 10 percent of the company.
2. GM will cut the number of its dealers by 42% to 3,605 by 2010
3. GM will discontinue the Pontiac brand

Has GM cut costs enough to appease the bondholders and avert bankruptcy?

Reducing the dealer network was necessary?

Will GM discontinue the Hummer and Saturn brand or will they transform the vehicle brand into a 100 mpg vehicle? Which is more likely?
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srgothard srgothard
 
 April 27, 2009 04:10 PM
I don't see how they will avoid bankruptcy with all the pensions they pay to their retired, and with all the new laws on mpg. Their best-selling vehicles will have to be scrapped for the new green laws. If the government really didn't want them to go under, they wouldn't be passing all sorts of new requirements. "You're about to fail? Okay! Now make all your cars more efficient, even though those models don't sell as well." Now is the time to back off these laws, and let the car industry recover.
Source(s):
http://www.bloomberg.com/apps/news?pid=20601109&sid=ak87hDNumPjU&re...

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• Pensions funding will have more problems in the future. The cost is enormous. Pensions increase financial pressure on companies. Many companies adding eligiblity rules the prevent new hirers from participating in the pension. The trend will be towards less pensions eligibility.


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dumblonde dumblonde
 
April 27, 2009 05:36 PM
Good answer even though I don't completely agree that you should "back off" the laws.

The truth is that American car companies have been failing because they don't give customers what they are looking for. Ordering them to make more efficient cars is actually a good thing but only if they make them well.
The efficient cars they sell aren't selling but not because they're efficient but because they are much worse than comparable cars like Hondas and Toyotas which are much better quality and design. They won't lose money because they are being regulated but because their cars are crappy!

GM needs to improve designs and quality. In a competitive market where you can get a Japanese car that won't break down and has high mpg why get an American car that will cost you tons to repair and waste gas?

Maybe they have improved but my family has never had a good experience with an American car. They always have weird electrical and mechanical issues. And we've owned Pontiac, Chrysler, Jeep, Ford... On the other hand my mother now owns a Hyundai and I own a Honda and we haven't had a single problem.

I don't think laws will have anything to do with whether they fail or not. They may actually help by forcing them to implement a new business model.

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srgothard srgothard
 
April 27, 2009 05:37 PM
You may be right on the lousy quality of their greener cars. It seems that what they do best is the less efficient cars. 11 of their 20 best selling vehicles are trucks and SUV's though.

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davepamn davepamn
 
April 27, 2009 07:29 PM
GM is going to shed another 23,000 jobs. GM is buying down its $27 billion in debt. Bondholders will own 10 percent of the company.

UAW is 1/4 the membership size.

You did press the pressure point, pensions. Who owns GM? The retirees own GM. GM needs to buy itself out of the retirement health care and pension plans.

What other action should they take to save their company?

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srgothard srgothard
 
April 27, 2009 08:14 PM
I don't know that they can save it. I have a relative living on a GM pension, so I am not happy to say that I think they can't keep doing what they are doing. They have to find a way to be competitive: maximize computer use over employee use, cut all models that sell poorly, possibly lower benefits to retained workers. I think it may be time to completely start over, and draw a new business model from scratch.

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pazaq pazaq
 
April 27, 2009 02:27 PM
No. I think it's likely that they will split off the business that are failing terribly like Hummer and pushing forward ones that are successful like Saturn.

Just my opinion.

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davepamn davepamn
 
April 27, 2009 02:38 PM
That is interesting about the split off. I would have thought GM would be make those announcements, if it were going to happen.

How successful is Saturn? Are you saying that Saturn is a profitable divison of GM?

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