General Motors, Accelerating Towards Bankruptcy
April 14, 2009 by Anthony Crawford
It’s hard to believe that from 1931 to 2008, when it was replaced by Toyota, General Motors was the largest carmaker in the world, and by some considerable margin.
In 1962 it had a massive 51 per cent of the US car and truck market but competition from outside the United States and GM’s failure to provide reliable cars on par with those from Japan, meant that the shine had gone off US made cars.
That in itself was almost a crime when you consider it owned classic ‘red, white and blue’ brands such as Buick, Oldsmobile, Chevrolet, Cadillac and Pontiac.
GM executives had forgotten the catchcry of their former leader, Alfred Sloan who led the company from 1923 to 1946, who’s success can be attributed to focusing on meeting consumer demand and offering a car “for every purse and purpose”
For many years it was innovation which kept General Motors in the lead, but with costly investments in good ideas such as the Saturn company (small cars) and the EV1 electric car in the 1980s and 1990s, which were both derailed due to lack of quick profits, GM has been playing catch-up.
Rivals Chrysler and Ford, were years ahead of GM, with their introduction of the popular SUV in the 1990s. It seemed that General Motors were reluctant to give up the highly profitable pickup trucks over the lesser margins of smaller cars, even when petrol prices went through the roof.
And in 2007, when the fuel price hit US$4 a gallon, GM Executives were apparently surprised by the move away from utilities and SUVs to smaller more fuel efficient cars. Again, they were dangerously slow to follow the trend.
By the end of 2007, the company had lost a staggering US$43.3 billion that year, and its share of the US Auto market had fallen to just 18.8 percent.
Losses continued to mount through 2008 and last month in its annual report, General Motors raised serious doubts about its ability to survive if the US Government didn’t tip in billions of taxpayers’ dollars just to keep the doors open.
“…. Inability to generate sufficient cash flow to meet our obligations and sustain our operations raise serious doubt about our ability to continue as a going concern”.
Should General Motors fail to reach agreement with its creditors who are carrying US$28 billion in GM debt, not to mention critical negotiations with the US car unions, the company will need to file for bankruptcy by June 1.
If that happens, and General Motors is restructured into two new companies, one with the brands worth saving and one that would be wound down, then speculation is that Pontiac and Buick will not survive.
Some say the industry will survive with far fewer dealers, they might be right.
In 2008 more than 1000 dealerships closed and 680 of these were either GM or Chrysler yards.
That makes even more sense when you realise that Toyota operates only 1400 dealers across the US, while GM runs more than 6000 despite the fact that they sell the same number of cars.
But with heroic nameplates such as the Chevrolet Corvette and new Camaro, we can only pray that new GM boss; Frederick A. Henderson -
can work out a deal that keeps the doors open for many years to come.
Print it: 
Yay !…..
About time! The fact that in recent years not even americans have been buying there cars says alot about their quality.
What can I say… So long Sucker !!!
buha ha ha ha ha ha haaaaaaaaaaaaaaa
Yeah I can’t say I care too much. It’s a shame really because they’ve only been making cars worth caring about for the last couple of years or so. I love the new Camaro and the new Corvette is (finally) fantastic but other than that…
I suppose I would quite like them to survive but not if they are being bailed out by the government. That money should be going to other more important things.
Was the “loan” even a loan? Were they ever going to be made to pay the money back to an already very much in debt America, even if they did get on their feet? It’s like when I lend my brother money, I know I’m never gonna see it again and I think the American government probably knew that too.
It’s going to do wonders for how much Co2 new cars put out every year.
I just enjoy those cars on video games and pics…
So who would be shitting their pants after seeing this? HOLDEN……….one word GOODBYE
I can’t say that I like GM products, but I do feel a tiny bit sorry for them. They took too long to realise that people want relative fuel effeciency, not 20+L/100km Hummers. I hope the non-US GM brands survive (Holden will because Middle-East demand for cars won’t die because nothing is taxed over there, especially fuel) like Opel/Vauxhall and Saab (I may be corrected but at this point isn’t Saab still owned by GM?) who really is in deep crap.
I hope that after the GFC is over that people will learn and will continue to very consious about their money etc and live like we do now.
While I find GM execs very vulgar, I do hope they slow things down as GM is crucial to the car industry.
I hope that SAAB surivives. But it kind of serves them right making cars that dont go with the trends – they have been setting themselves up for failure.
GM will inevitably go into Chapter 11 and will re-emerge as something quite different. It will survive; but not as we now know it.
Holden will be one of the casualties. It might survive as a design centre?
Hopefully some good will come of the demise of local manufacturing and we can end the massive distortion of car prices in Australia when there is no further need to subsidise the local assembly sheltered-workshops.
GM will go into chapter 11 and emerge a better company
You do realise they are doing this so they can split the company’s useless assets, also remove union contracts and useless assets right?
This isn’t the death of GM, its simply a way of them making themselves profitable
http://www.autoblog.com/2009/0.....ankruptcy/
read that
but dont expect them to be anything but a small USA only car company, they have to ditch all parts that dont make money……….and Holden is one of those.
GM will Go chapter eleven restructure, sell off or wind up the least wanted and evade all it’s debts! It may not be big when it re-emmerges, however it will be practically debt free and all UAW contracts will be out the door! Great outcome for a lazy corporate board, but basically goes against a blue blooded persons grain. Ford sees the stuff heading towards the fan and restructures, GM sits by, does nothing and will get out of it a lot easier!!!!
Good, the sooner GM disapear the better!
Tommy…..I agree…and the sooner Holden dissapear the better as well. The less Daewoo crap the better. Barina, Captiva, Viva ………..how can Holden have no concience and force that crap on people who know nothing about cars……….Holden should be ashamed of themselves and deserve to die.
One of GM’s main problems stemmed from having so many variants that ultimately “clash” with each other.
When you look for a Toyota sedan, you get a couple of choices, same with Honda, or another fairly successful company.
In terms of GM, you have many of its sub-division having a sedan that clashes with each other, similarities between the variants isnt much, except some are classified as “higher” end such as a Buick… etc.
GM also tends to made decisions that are very spontaenous or “out of the blue” and have less focus or “trust” in their structure/products minus except “big” vehicles… in which they SHOULD of made a big change now it is too late to adapt, as others are completely way ahead in the small car market race.
Holden isnt as bad, as Holden in the end is classified as a “higher” end of GM’s brands, like Opel, pretty much Opel/Holden are the same.
But worth noting, this will change the industry forever, and is probably a catalyst in a major shift in the automotive sector that will eliminate the weak, combine the smaller companies and give a boost to the Koreans.
Lukaas…..Holden and Opel arent the same. Holden are basically a Daewoo importer now anyway and the Commode is dying. so why would GM want to keep a branch that keeps losing money? GM will be better off to keep their production in the USA so they have no liability with other company off-shoots.
For the “NEW” G.M. to survive they need to rid themselves of:
Pontiac,G.M.C[which are just Chev in drag]Buick,Saturn,Saab&Hummer
On another web-site someone suggested making Pontiac the
performance? brand.
Hello!
As much as I feel Chev are presently a “JOKE” aren’t they
G.M’s “performance” brand with Camaro/Vette.!
Pontiac has only ever been a clone of Chev anyway.
e.g the Pontiac Trans-Am was just a Chev Camaro.!
Local guy, lets hope that GM sell holden and opel so that some smart person will snap them up and get them back into shape. But if not they can ebecome independent and then be forced to make their own tech. ie engines and platforms. Opel and Holden dont deserve to burn with their idiotic parent because they make gud quality products and try hard.
God im getting sick of hearing this ,like are we there yet are we there yet just do it if your going bankrupt then get it over with who cares.Like i was just reading thay have over 6 thousand dealers over there are thay brain dead.Toyota have 1200 dealers and there number 1.GM are just so left behind its not funny
GM have been producing horrible cars for decades. All they can build profitably is SUV’s and light trucks because of less competition.
Any company that can produce a car as ugly as they Pontiac Aztek and get it past all the committees into production has lost the plot.
Local Guy, Problem is Holden have in the past imported the Opel cars but they have pretty much always been rejected by Australians try the Zafira, Vectra, slow selling Astra etc etc. The Australian Gov’mt continue to subsidise local cars and penalise imports which corrupts the market somewhat. In reality the Commodor and Falcon should be about Au$10K more expensive than they are, they also have been sponsoring nothing but gaz guzzlers that folk do not really want. Look at whats selling well and that’s what Holden should have.
Sorry, I know this is an Australian website so it’s to be expected but why does Holden need saving? Their cars are out of date. The only thing you’d be losing by getting rid of Holden is the big unnecessary petrol guzzling sedans that aren’t even that good.
Opel makes sense. They make good looking, good quality cars that are right for the times and drive well but there is no call for the Commodore, the vile Ute, the Statesman, the Caprice and any other thing that they still bother to make. They should go too. They don’t matter.
Also, the only real reason to keep any other GM company other than Opel going is for jobs. Maybe it’s time they put all that money into finding these people new employment rather than letting them continue making cars that people don’t want and certainly don’t need.
High Beam – if you care to read GMs initial statement that they made at the US Congressional hearing as to why they should bail out the US Car makers; you will see that as part of their restructuring plans they have said that GM will sell off a number of car companies such as Saab and others and that they will Keep Holden and Opel.
The reasons given were not only to maintain a presence in their respective regions [which is the main reason they bought Opel and Holden in the first place]
But also the fact Holden and Opels plants are more modern flexible and more productive than a number of factories in the USA.
GM also believe that Opel and Holden have a lot of potential particularly in terms of Opels FWD experience Holdens RWD experience.
Not to mention that they both design and build better looking more practical reliable cars compared to most of GMs US built cars
Wheelnut..are you on drugs? Holden build relaible cars? Which one? Certainly not the Commodore……….the most re-called car in Aust history ! Not to mention their woeful build quality and ancient feeling engines\drivetrains. GM has ditched the VE platform so thats the end of that. Holden cant be propped up by GM anymore and I doubt anyone would want to buy them. NO they wont keep OPEL as they are getting rid of all their European arms as they are not any good either, compared to FORD who do very very well in Europe.
Wheelnut; GMs initial statement that they made at the US Congressional hearing was rejected out of hand by congress.
There are only 2 outcomes for GM.
The most likely is bankruptcy, which means goodbye Holden.
The other is a massive government backed restructuring. Selling off what can be sold and closing down what can’t.
The aim will be a core business built around American jobs in the US. Holden have been losing money for years. You do the math.
Holden will not see 2010.
I’m sure the hundreds of thousands of people who rely on GM for their jobs world wide would be so happy that so many people in Australia cannot wait for them to loose their jobs. And why? Just because you don’t happen to like their products, so what? don’t buy them, but what gives you the right to say that these people don’t deserve a job.
Australian’s can be so narrow minded and frankly disgusting sometimes.
and the funny thing is that some of the absolute garbage that people like Local Guy say that is so incredibly un-informed and overly biased towards the brand they do like (probably only because daddy used to buy fords) it would actually be quite funny if it wasn’t so disturbing the distain some people show towards fellow human beings.
I wonder if you where talking to a GM Holden worker face to face would you say “hey mate good riddance ay, i don’t give a f@%^ that your loosing your job”
Richo, I could not put it any better. Local Guy is not a local persons arsehole. You are a disguisting idiot, if Holden does fold do you realise how many LOCALs will be unemployed?
Get back in you EL Falcon and piss off somewhere else
Hyundai were at the brink of oblivion during the Asian Financial Crisis.
Look at them now!
Who’s to say where GM will be in 10 years.
Hey Richo, when I started work in the Steel industry there were over 20,000 MORE workers employed directly by BHP then now.
Ford and Holden do not buy all their steel from BHP anymore and have not done so for a long time.
I have lost my job now so why should I want to subsidise car jobs when no-one supported mine? Including the car industry.
BHP cannot supply high tensile steel require by these manufacturers. They had to go overseas to purchase the MORE costly steel required to satisfy customers demand for a safer and stronger vehicles.
If you want to blame somebody SAM R, blame BHP for not producing this product.
Actually the BHP offshoot Bluescope produces some of the best steel products in the world, cutting edge technology yet job cuts have been massive and it is struggling to survive because of imports and lower prices.
Holden and Ford do not produce cutting edge products that people want to buy, They make big bloated petrol wasting outdated dinosaurs that no-one wants. Holden is trying to make us buy Korean rubbish for small cars.
At least Ford looks like it may make a decent small car here next year. 5 years too late.
SamR – your kidding right? The Australian government doesn’t support mining and mining jobs? You can’t honestly be serious, your taking the piss surely…?
Besides if BHP looses its contract to supply steel to Holden, then that is the fault of BHP, you can’t blame Holden for chosing a different supplier if BHP wasn’t supplying the product they needed. Bluescope may well supply great steel, but if they do not provide the specific product Holden requires, ie high tensile steel matching the specification Holden requires to meet the more stringent crash safety laws, then obviously they are going to have to go elsewhere. I seriously cannot understand your argument. BHP do not supply the product Holden requires, but that is somehow Holdens fault? Your absolutely kidding me surely….
Oh and keep up SamR, holden is making a small car here next year too…
Also all of the european car mags seem to think we are getting the bargain of the century with out large family cars, they absolutely lvoe them, these are EUROPEANS! You need to look past your brand snobbery
Richo, I agree the Commodore and Falcon are huge bargains in a world context, lots of car for the money. I also agree Ford and Holden in Australia have done a fantastic job with the cars they have, the money they have and the market size.
But it is a job that cannot be done anymore, the world has changed. Fuel economy is the number one feature for cars now and their current big cars can never achieve this.
Ford should switch totally to the Focus and Holden the Astra with local production and heavy localisation. I would buy one no problem just like I did in the past.
and thats what they are doing SamR… thats what they are doing….
I drive a VE Holden SV6 Ute and would not call it a gas guzller at all, regularly acheive 10-11 litres per 100km around the suburbs and about 8 litres per 100km on the highway, Ive also had it display 1060km to empty on the trip commputer display. Ive travelled over 15,000 trouble free km since buying new 8 months ago.
I find only uneducated/snob type people bag out these vehicles ie Holden Commodore and Ford Falcon. You dont hear people shout down companys like Mazda with a 4cyl crossover type vehicle that uses 14l/100km yet a large Commodore/Falcon uses 10l/100km.
Try move a family of 4 or 5 in a Nissan Micra or Mazda 2!
10 l/100km for dinosaurs?is it so hard to accept the reality.r u talking on the paper figures or real world?
straight line and speeding off…hrrrr?dinosaur Vs dinosaur.no winner here.both will be history.the less dinosaurs on the road the safer for the community.by thw way….not yet meet any high educated people driving that crap utes….most are the less educated trade people and you know how they drives their carps.
I agree Naith – whats even worse is when you get people who continually go on about something [adnauseum] despite THE FACT that no one is paying attention to the inane dribble that they are spruiking.
Not to mention THE FACT that they find it hard to believe that the majority of people who either have owned/driven a Falcon/Commodore or still do.. are happy with their cars performance reliability or fuel efficiency etc.
I mean who else would know how good a particular cars fuel efficiency is or whatever; than the wo/man who owns one?
I find peole that make such unfounded comments do so because THE FACT is they have never and will never drive/own a Falcon or Commodore as they are scared of the unknown – worried that they might actually be impressed bty what teh Falcon and Commodore have to offer etc
Quote: “not yet meet any high educated people driving that crap utes”
You obviously haven’t met the Sultan of Brunei then.. as among his collection of performance cars he has a Maloo R8.
Not that the level of education has anything to do with buying a car! I mean have a walk around the Car park of any of the [40 odd] in Australia and tell me jhow many brand new Audis Lexus Ferraris Porsches Merc-Bewzs and BMWs you see.
I find it ironic that there are people on here who use the term Diniosaur to describe bioth the Falcon and the Commodore – as they obvioulsy belive that these cars are past their use by date very low tech and verging on the edge of extinction.
However; the Crocodile and the Shark [as well as a handful of others] are two iconic animals whose ancestors were around during the time of the dinosaurs but have evolved to survive/outlive their counterparts such as the tri-ceratops the and the terranosaurus rex..
Yet they have evolved and have become better at what they do and just like the Falcon and Commodore and just like the Crocodile and the Shark are relatively simple creatures.
Thanks Wheelnut and Miniskip, I have to laugh when I read ‘The Fact’ talk about educated people when he/she can’t string a proper sentince together. Proberly still in year 7 at school, yes?
My father has owned a VX Commodore since new (7yrs), has clocked up 125,000km and besides servicing has only had brake pads and tyres changed. It too acheives great fuel economy and it has a ‘primitive’ pushrod V6 getting approx
6-700km to the tank around the suburbs.
By the way here’s some FACTS for ‘The Fact’
Holden Commodores, not sure about Ford Falcon, use a very similar ABS/Stabillity Program to alot of top end European Cars so there’s your saftey argument blown apart not to mention 5 star ancap ratings for both these vehicles.
I’ll go on, its about time people like you accepted the reality that tradespeople that drive these utes also build your houses, do your plumbing, electrical work, landscaping or any other service you would be so uncapable of doing. If you would take the time, an open mind and a hint of brains rent a Commodore or Falcon and take it for an honest drive and then see what you think.
Oh by the way, the Toyota Corrolla has been around since the 60’s is that a Dinosaur to?
the fact… lol i hope a tradie knocks you out. :)