General Motors Bankruptcy?

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I have heard about the financial troubles of GM and also have noticed the incredible offers from thier competitiors (0%, over $9,000 in incentives (Dodge)) I think it would be a horrible time to buy a General Motors product... they have already announced shutting down Oldsmobile, how long can they hold on... the other manufacturers are already "pouncing" on thier vulnurability in an attempt to gain GM's small market share.
BUY GM :oops: :screwy: :banghead: :cussing: :doh:
Just my :2cents:

posted by  Fordone

I just read an article on how GM lost over $850,000,000 (that's MILLION) in this first QUARTER (Not even Year!). I dont think they will ever file for bankruptcy, but the only way GM can sell it's cars is by giving $8k-$12k rebates. As the joke states, Bob Lutz' dream is to make one vehicle that people will actually buy for MSRP (like a Honda or Toyota). Just for kicks, in our paper this morning here is some prices for some brand new 2005 Chevrolets at Bill Heard Chevrolet here around Atlanta...

Car/MSRP/What they are selling it for - What you Save

Cobalt/$15,135/$7,635 - $7500
Colorado/$17,670/$7,635 - $10,035
Malibu/$20,660/$11,660 - $9000
Impala/$24,735/$14,735 - $10,000
Trailblazer/$27,380/$17,880 - $9500
Silverado Crew/$30,695/$19,195 - $11,500
Avalanche/$35,100/$23,600 - $11,500
Tahoe/$38,825/$26,325 - $12,500

And the big saver this week...
Suburban/$49,399/$35,999 - $13,400

Now if that's not close to desperation, I dont know what is. This makes me realize sometimes why I actually SEE people driving in Cavaliers/Impalas/Malibus... :laughing:

posted by  thunderbird1100

I would worry if they are "giving" them away for half price as this suggests when they go out of buisness what will become of the warranties?

posted by  Fordone

r u serious about the prices!?!?

posted by  c90acm

Yup, been like that for months on their 2005 models.

posted by  thunderbird1100

The whole automotive industry is down right now. GM, being the largest manufacturer of automobiles, of course sees the largest loss from this. The losses aren't surprising.

GM going bankrupt though? Sure, if you view GM only as an automobile manufacturer. But honestly, the majority of GM's money comes from it's other holdings. Bosch, Delco, GMAC finance, Hughes, DirecTV, XM, etc. Even if GM didn't make a dime from it's cars, it would still be one of the world's largest companies.

And if the impossible happened and GM went under? Many of the parts found in other makes are believe it or not, GM made (these include asian and european manufacturers). Where GM goes, so does the industry.

posted by  Gothicaleigh

So what should we buy stocks at :2cents: :thumbs: ?

posted by  Fordone

Don't misunderstand, right now is no time to be a GM shareholder, but to go around crying that they're going bankrupt couldn't be further from the truth.

Interested in GM stock?
Don't buy yet. The industry shows no sign of stabilizing soon and the price of shares are sure to go lower.
I would suggest buying GM right before next year's NAIAS though if you're looking for a quick gain. The shares should be reasonable after the projected hard summer.
Why NAIAS? That's when GM unveils it's new truck platforms (which is the meat and potatoes of any US manufacturer). Without a doubt there will be a gain at that time. :laughing:

posted by  Gothicaleigh

GM takes the first wise step to turning it all around:

http://cnn.netscape.cnn.com/ns/news/story.jsp?id=2005032315440002961051&dt= 20050323154400&w=RTR&coview=

GM has always been it's own worst enemy with divisions that overlap and compete against each other. So which divisions do you think will see the axe?

Personally, I think they could slide the GTO over to Chevy to be the new Camaro and trim the rest of Pontiac.
Why save Buick instead? They have one of the best reliability scores in the industry and they serve to pacify the older customers who feel GM abandoned them when they moved Cadillac up-market.

GM's divisions could be shuffled up like so:
-Chevrolet (leave the trucks to GMC; Most are little more than badge changes anyway)
-Buick (the $3 Billion redesign could revitalize the brand; they have always made good cars, just not interesting cars; this will be the soft luxury brand along the lines of Lincoln)
-Cadillac (keep up what they have been doing; it's one of the few GM brands that is doing successfully)
-GMC (will be the truck division; fold Hummer and the overlapping Chevy trucks into it)

Kia can be replaced with Chevrolet.
Saab has already started producing small european Cadillacs and could be absorbed by that company.
Pontiac can give the GTO to Chevy as the next-gen Camaro; The upcoming Solstice is the Buick Velite; The Bonneville GXP could become a Buick and the rest could be dropped.

Saturn... is run differently and I am unsure what could be done with them...

Just some ideas.

posted by  Gothicaleigh

Where to begin:

1) Other companies going after GM's meager market share. Uhm, GM is still around 25% of the market in North America, and the worlds largest producer. So while they have shrunk, their market share is not small.

2) GM announced loss of $2B in CashFlow, Not Profits. Actually should make $1/share this year. Not great, but not bankrupt. Not while GM has liquid Assets in the $20B range. Kinda like sitting in the bar and running a tab for 2 hours. Creates a negative cash flow. But, if you have money in the bank, you ain't going bankrupt. Just dont do it too often.

3) GM does not own positions in Delco (uhm, Delphi???) or Bosch. It does lean heavily on GMAC to generate a lot of profit, but not suppliers.

4) Rebates. Ever wonder how they can offer rebates that high? Maybe the car was overpriced to start with? Hey .... come get a $1,000,000 rebate on my car .... MSRP is only $1,025,000. Sad thing is, it would work, and some people would brag about their $1M in savings. Still distressing to see the game has reached these levels.

5) Don't buy the car cause the warranty will be no good. Uhm, the average warranty cost on a vehicle is around $1200. Are you telling me (if you believe the rebate numbers) not to save $7500 TODAY, because there is a CHANCE that the manufacturer may not cover $1200 in expenses later????? I will take $7500 cash to cover a limited potential future downside risk of $1200 anytime.

By the way, GM would take a long time to go under and settle debts, probably longer than the 3 year warranty on the vehicle. The suppliers still have part tooling, and the demand would be there, so parts will be available for ever. And if GM did go under, given their impact on the economy, I would be less worried about my car and more worried about the US economy which would TANK beyond belief.

posted by  Topshelf

Regarding the division shuffles:

I think Chevy Trucks outsell GMC like 3 to 1 .... so not sure if its a good idea to rename all the trucks GMC.

The GTO is out now, and there is speculation that it may not get replaced with the recent announcements on platforms, so not sure how you would rebadge it into a camaro ... since it may not exist.

The Kia / Chevy thing is an interesting concept .... except I believe Kia is a totally different company than GM. Were you thinking of Daewoo which GM bought some of the assets of a while back, or were you suggesting another merger?

posted by  Topshelf

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