'Substantial doubt' for GM future

[ELVIS]

GM is struggling in the dire market for new cars

BBC News (http://news.bbc.co.uk/1/hi/business/7926258.stm)

Thursday, 5 March 2009

http://newsimg.bbc.co.uk/media/images/45537000/jpg/_45537845_006717914-1.jpg

There is "substantial doubt" about the ability of General Motors (GM) to stay afloat, the firm's auditors have said.

Ongoing losses and the struggle to generate cashflow meant the firm's ability to continue as a going concern should be questioned, they added.

Last week GM posted a $30.9bn (£21.9bn) loss for 2008 and warned that 2009 was set to be "challenging".

The firm, which plans to cut 47,000 jobs also said it might need another $22.6bn in government loans to survive.

It has already received $13.4bn in federal loans as it struggles in what analysts say is the worst vehicle sales market in 27 years.

GM said that its creditors had decided not to force the company to repay more than $6bn in loans following the auditor's warning, in order to let GM press the case for more government financial aid.

Shares in General Motors fell almost 15% in early New York trading.

Liquidation fear

"The corporation's recurring losses from operations, stockholders' deficit, and inability to generate sufficient cash flow to meet its obligations and sustain its operations raise substantial doubt about its ability to continue as a going concern," auditors for Deloitte & Touche wrote in the annual report.

GM reiterated on Thursday that a bankruptcy filing could lead to liquidation, as the company would not have enough funds to finance its reorganisation.

Besides, consumers could be reluctant to buy bankrupt carmakers' vehicles, GM said.

According to GM, its February sales plummeted 53% from a year earlier, as its rival Ford posted a 48% drop.

Step in

The auditors' remarks reflect comments already made by the firm about its dire difficulties.

Earlier this week, GM's top executive warned the European divisions of General Motors (GM) could collapse within weeks without European governments' help - costing up to 300,000 jobs.

Chief operating officer Fritz Henderson said governments should step in immediately to ensure GM Europe did not run out of money by April or May.

GM said in its annual report: "Our future is dependent on our ability to execute our viability plan.

"If we fail to do so for any reason, we would not be able to continue as a going concern and could potentially be forced to seek relief through a filing under the US bankruptcy code."


:elvis:

[Combat Ready]

So--the taxpayers are already on the hook for 13.5 billion. Then--we give 'em another 22.5 billion. What are the odds they still will file for bankruptcy after the "bailout"?

95%?

[ELVIS]

UPDATE: GM Gets Defensive On Blog Over Viability Doubts

March 06, 2009 (http://money.cnn.com/news/newsfeeds/articles/djf500/200903061556DOWJONESDJONLINE000864_FORTUNE5.htm)

By Steven Russolillo

http://www.tuningnews.net/news/080510/cadillac-cts-v-blisters-nurburgring.jpg

http://www.slickcamaro.com/rt16.jpg

It's a shame for an American Icon to be in so much trouble with so many promising ideas and high quality products available or on the horizon...


NEW YORK -(Dow Jones)- General Motors Corp. (GM), in response to its auditors casting doubt on its viability plan, said on its corporate blog that it still believes its restructuring will lead to long-term success.

GM's continuing losses and inability to generate cash for continued operations led auditors from Deloitte and Touche to determine there was substantial doubt that the company can survive. GM admitted many factors, some of which are out of its control, contribute to its uncertain future, but maintained its vision for long-term prosperity.

"We acknowledge the challenges and risks that face us today, but we're still going forward with our plan, we're still making the best cars we've ever built, and we're still rebuilding our company for long term viability," Steve Harris, vice president of global communications, wrote on GM's FastLane Blog on Thursday night.

He noted the viability plan will position GM "not just for survival but success" as the market recovers and global auto sales reflect a strengthening economy.

"I know, some will say that this sounds like corporate-speak. But what does anyone expect - that we'll pick up our marbles, say 'They're right,' and go home? Sorry we're planning on being around," Harris added.

GM executives have used the blog in recent weeks to describe to the public details of its restructuring plan and explain why bankruptcy isn't the best option for its future. Several blog posts have also attempted to correct ways in which it felt it's been misrepresented in the media.

GM previously said it could cost as much as $100 billion to restructure and emerge from bankruptcy. But The Wall Street Journal reported Friday that top executives may now be more willing to accept a speedy bankruptcy reorganization financed by the government.

Harris posted a follow-up blog entry on Friday afternoon, saying GM hasn't changed its stance on bankruptcy.

"Restructuring the business out of court remains the best solution for GM and our constituents," Harris said.

He noted GM has analyzed various bankruptcy scenarios, but still firmly believes that an in-court restructuring would carry tremendous risks, including "a dramatic deterioration of revenue due to lost sales."

"That's the deal, folks. We haven't changed our thinking. You analyze every option, but you move ahead with the one you think is best for the company. That's what we're doing," he said.

GM shares, which have lost more than 90% of their value over the last year, were recently down 23% at $1.43.

"We understand all too well the challenges we face at this time and in this truly difficult economy," Harris said. "But we're not giving up, we're not giving in, and we sure aren't planning on going away."



:elvis:

[FORD]

The fact that they're going ahead with vanity cars for the rich like the "new Camaro" is exactly why they're failing.

Sure, if gas was .25/gallon and nobody was DYING for oil, I'd love to have a car like that. But it is simply GOD DAMNED IRRESPONSIBLE to keep building something like that, or gas hog SUV's in the current financial OR environmental climate.

Especially when they pulled a perfectly good fleet of electric cars just a few years ago.

[ELVIS]

The V6 powered Camaro for just above $20,000 is one of the cars than may be able to save GM...

"Vanity cars."


:rolleye0018:

[swage33]

GM and their competitors just want too much for their vehicles. Last summer I bought a worktruck, V6, 4X4 with cd and air. In my opinion this was an 18K truck. I had to pay 22K for it. I went to several dealerships and got the same story...they will not move on the sticker price. No one is guiltier than the rest, they are just not pricing their product honestly.

[FORD]

The V6 powered Camaro for just above $20,000 is one of the cars than may be able to save GM...

"Vanity cars."


:rolleye0018:



Artificial penis extensions on wheels. And if they're selling it for $20,000 then that's about half of what they said the price was going to be when they first announced the prototype a couple years ago. It's still a gas hog though.

[ELVIS]

Sounds like a fair deal to me...

[Nickdfresh]

GM and their competitors just want too much for their vehicles. Last summer I bought a worktruck, V6, 4X4 with cd and air. In my opinion this was an 18K truck. I had to pay 22K for it. I went to several dealerships and got the same story...they will not move on the sticker price. No one is guiltier than the rest, they are just not pricing their product honestly.


What were you basing your opinion on? If all the trucks are low $20s, than they probably are invoice priced at above the $18K you were looking for...

[Nickdfresh]

It's a shame, because I honestly think the Chevy Malibu is one of the most beautiful cars on the road as far as family sedans go. The Honda Accord sedan and Camry you can fucking keep (or "Camcord")...

http://blogs.karldirect.com/wp-content/uploads/08-Chevy-Malibu.jpg

[FORD]

I find it hard to believe that the dealerships "will not move on the sticker price". Even in a good economy, the sticker price is always far enough above the dealer's actual cost to allow for a profit after negotiations. In this economy, particularly in Appalachia, I'd think they would be even more desperate for a sale.

[Nickdfresh]

I find it hard to believe that the dealerships "will not move on the sticker price". Even in a good economy, the sticker price is always far enough above the dealer's actual cost to allow for a profit after negotiations. In this economy, particularly in Appalachia, I'd think they would be even more desperate for a sale.


I guarantee that dealerships will move on the sticker price, and in fact there are manufacturer incentives as well. But there really isn't that far to move, and what's the point of selling a car for nothing? One might as well fail then.

The above example should be applied everywhere. In "my opinion," a toaster at Target should be $10 but they want $15 for it. Okay, than tell the kid at Target that and wait for him to invite you to get the fuck out...


But the profit margin for dealerships on vehicles is almost hysterically negligible. The furniture store down the street makes a much higher percentage on their merchandise than does an American car dealership...

[sadaist]

Sad. I love GM as it's what fed my family for many, many years. So I'm biased, yes. But I love their pickups. As far as Camaros & Vettes, I like the old ones 60's & 70's.

[Nickdfresh]

GM will survive. If nothing else, because they are "too big to fail." A failure of GM would cause absolute economic havoc in not only the US, but much of Europe and Asia as well. And it would resonate far beyond just American automotive brands as an entire network of parts and services is based on a fragile network that relies on big manufacturers like GM to keep functioning. You'd be almost as fucked if you owned an older Toyota as the parts distribution for repairs would be severally impaired if GM went under..

We simply cannot allow GM to fail kids, for the same reason we cannot let AIG or Freddie/Fannie to fail. They're simply too big and the resulting economic meltdown would lead to a real depression...

[Va Beach VH Fan]

And if they're selling it for $20,000 then that's about half of what they said the price was going to be when they first announced the prototype a couple years ago. It's still a gas hog though.

Not true FORD. I've been paying attention to the Camaro's pricing since they announced it was coming back. The V6 base price has always been around 20K. The V8 was around 30K or so...

I was considering getting a new one soon, but things will have to change for the better, and soon...

[swage33]

I find it hard to believe that the dealerships "will not move on the sticker price". Even in a good economy, the sticker price is always far enough above the dealer's actual cost to allow for a profit after negotiations. In this economy, particularly in Appalachia, I'd think they would be even more desperate for a sale.

Why would you assume that desperation exists here in appalachia? We have yet to feel this economic downturn...coal is still strong. Believe it or not, Ford, there is money here and more dealerships than I can count.

[Nickdfresh]

Not true FORD. I've been paying attention to the Camaro's pricing since they announced it was coming back. The V6 base price has always been around 20K. The V8 was around 30K or so...

I was considering getting a new one soon, but things will have to change for the better, and soon...

Yeah, and the V6 ain't a "gas-hog." I bet it gets around 30 mpg on the highway...

I bet the V-8 probably does mid-20s...

And Ford, don't you drive an F-150 Mr. High and Mighty?

[FORD]

And Ford, don't you drive an F-150 Mr. High and Mighty?

I barely drive at all anymore :(

I just wish, if they were going to bring back the name and the look of "Camaro" (or "Mustang" or "Charger" for that matter) that they would find a way to power the damn thing with 21st century technology.

The Tesla roadster is a damn good idea for a car. Electric car that looks and drives like a sports car, even capable of freeway speeds?

Outstanding idea! Downside is that (like most sports cars) its so goddamn small that I'd never fit in one. Give me a hydrogen fuel cell powered Bitchin Camaro, and I'll run all the way to the Auto Mall to buy one.

[ELVIS]

It would be $99,000 base price...

[ELVIS]

GM will survive. If nothing else, because they are "too big to fail."
We simply cannot allow GM to fail kids, for the same reason we cannot let AIG or Freddie/Fannie to fail. They're simply too big and the resulting economic meltdown would lead to a real depression...


That thinking is part of compounding the problem...

Nothing is too big to fail, including the US itself...

If you're not convinced real depression is not coming, what can you point at to stop it, the 25 jobs Obama "saved" today in Ohio ??


:biggrin:

[hideyoursheep]

GM will survive. If nothing else, because they are "too big to fail." A failure of GM would cause absolute economic havoc in not only the US, but much of Europe and Asia as well. And it would resonate far beyond just American automotive brands as an entire network of parts and services is based on a fragile network that relies on big manufacturers like GM to keep functioning. You'd be almost as fucked if you owned an older Toyota as the parts distribution for repairs would be severally impaired if GM went under..

We simply cannot allow GM to fail kids, for the same reason we cannot let AIG or Freddie/Fannie to fail. They're simply too big and the resulting economic meltdown would lead to a real depression...

I disagree with that Nick, and I'll tell you why...

Nearly all of GM's components come from non-union plants who have contracts with other automakers as well. That wasn't always the case, but now, I can't think of one single plant that exclusively flew the GM banner and still operates in the US today. There have been 5 or 6 shut down in the past 25-30 years in this area ALONE, and that was before this big economic meltdown. GM wanted to cheapen the workforce, and moved much of it's operations to Mexico. IMO, that's about the same time that GM's quality took a shit, and they really never produced anything that could compete since. Wherever they still build cars in the US for GM, I have no idea anymore, but I know where the Hummers and SUV's are being assembled. Habla Espanol?

The same companies that produce components for GM will be obligated to produce service parts for years to come, even if GM tanks. Those same companies will also be able to continue providing for the other automakers without missing a step, and eventually keep growing with the stronger ones.

GM failing by itself would be bad, but it wouldn't be as catastrophic as they would have you believe.

Just how many jobs does GM have in the US anymore? Not many.



For Gods sake. The Malibubu might look good on the outside, but they dont fucking last! (4 cyl. models are shit!)

[hideyoursheep]

Bitchin Camaro.





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:appl::appl::appl::appl::appl:

[ELVIS]

For Gods sake. The Malibubu might look good on the outside, but they dont fucking last! (4 cyl. models are shit!)

I disagree with that...

GM's quality is better than ever in terms of everything...

The new Malibu, even though I don't care for it much, is light years ahead of a malibu of just several years ago...

That's what's sad about the idea of losing an entire product line, but I don't think that will happen entirely...

But opinions like yous are common on the internet and they are based on GM's long history of poor quality that lasted up until very recently...

All brands have made a huge leap in quality, including Hyundai...



:elvis:

[Nickdfresh]

That thinking is part of compounding the problem...

Nothing is too big to fail, including the US itself...

If you're not convinced real depression is not coming, what can you point at to stop it, the 25 jobs Obama "saved" today in Ohio ??


:biggrin:


I should have said "too big to let fail." The will be bailed out...

[Nickdfresh]

I disagree with that Nick, and I'll tell you why...

Nearly all of GM's components come from non-union plants who have contracts with other automakers as well. That wasn't always the case, but now, I can't think of one single plant that exclusively flew the GM banner and still operates in the US today. There have been 5 or 6 shut down in the past 25-30 years in this area ALONE, and that was before this big economic meltdown. GM wanted to cheapen the workforce, and moved much of it's operations to Mexico. IMO, that's about the same time that GM's quality took a shit, and they really never produced anything that could compete since. Wherever they still build cars in the US for GM, I have no idea anymore, but I know where the Hummers and SUV's are being assembled. Habla Espanol?

The same companies that produce components for GM will be obligated to produce service parts for years to come, even if GM tanks. Those same companies will also be able to continue providing for the other automakers without missing a step, and eventually keep growing with the stronger ones.

GM failing by itself would be bad, but it wouldn't be as catastrophic as they would have you believe.

Just how many jobs does GM have in the US anymore? Not many.



For Gods sake. The Malibubu might look good on the outside, but they dont fucking last! (4 cyl. models are shit!)

They still employ a lot of Americans and Canadians as well. And with the drug wars and coming, increasing instability in Mexico, a lot of companies are taking a second look at that option. Especially, as you said, it has an impact on quality control. I think this sort of product unevenness is actually killing Nissan, which makes some great cars, but suffers from a legendary inconsistency in fit-and-finish...

[Va Beach VH Fan]

Yeah, and the V6 ain't a "gas-hog." I bet it gets around 30 mpg on the highway...

I bet the V-8 probably does mid-20s...

Not that much Nick, the V6 will probably hit 25 in highway.... The V8 will be lucky to hit 20...

So, in my mind, a Camaro V6 with 304HP, getting around 25MPH, and costing in the low 20K's is not a bad deal....

Of course, if there's gonna be no one to service the fucking thing, that's a problem.... ;)

[Von Halen]

Fuck GENERIC Motors!

The Camaro looks like shit! I was driving next to one yesterday, and it looks worse in person, than it does in the pictures. It is a disgrace to the Camaro's of '67, '68 and '69, which it was supposedly designed after. But, I guess that's what we get for having it designed in Australia (no offense Panamark) and having it built in Canada. (fuck you Canucks)

I do not believe the quality of the American cars is much of an issue anymore. Maybe for the smaller disposable ones. But, for the midsize and up, I'd say our quality is now as good as any.

I think the new Malibu is a very good looking family sedan. It is one of the few bright spots in the GM arsenal. The Silverado is the most hideous looking truck ever built. I don't know why, but the Sierra is much better looking.

GM's legacy costs are killing them.

I am in those plants everyday. There isn't a line worker in those plants, that is grateful for their job. They spend more time trying to figure out how to get out of work, than they do, doing their fucking job.

Unfortunately for Detroit, those line workers are the people that stimulated the majority of the economy in this town. When they aren't getting paid, stuff isn't getting bought.

Fuck 'em. If they fail, they fail.

[hideyoursheep]

I disagree with that...

GM's quality is better than ever in terms of everything...
What?! Better than ever? Just how long have you been driving?


The new Malibu, even though I don't care for it much, is light years ahead of a malibu of just several years ago......I have to ask-which model Malibu are you referring to here? The ones from just a few years ago, or when the Chevelle turned?




But opinions like yous are common on the internet and they are based on GM's long history of poor quality that lasted up until very recently.........There aren't many bigger fans of the OLD GM products than me ELVIS, but if opinions like mine are common anywhere,
it's because that's the opinion GM has given us through recent experience. Who wants to buy anything that self-destructs @ 100 k?


All brands have made a huge leap in quality, including Hyundai...
:elvis:Fucking Korean garbage! The reason they offer a big warranty is because they die when it expires. See many 10-15 year old models still out there? The first year they were sold here I drove the sporty model....it topped out at 62 mph!!

[hideyoursheep]

GM's legacy costs are killing them.
I am in those plants everyday..
What plants?

What legacy costs?

Are the Mexicans now entitled to pensions?

There aren't enough GM plants left in this country to claim that as a fault!

[hideyoursheep]

And with the drug wars and coming, increasing instability in Mexico, a lot of companies are taking a second look at that option....How ironic that to escape the union worker, they opted for the 'no drug test' employee!

[Nickdfresh]

Or the headless ex-employee laying in the street...

[Nickdfresh]

...

I do not believe the quality of the American cars is much of an issue anymore. Maybe for the smaller disposable ones. But, for the midsize and up, I'd say our quality is now as good as any.

...

The irony being that GM's worst car quality-wise is made in Korea by Daewoo: the hideous machine known as the Aveo...

[twonabomber]

They spend more time trying to figure out how to get out of work, than they do, doing their fucking job.


i worked in a UAW shop that was a Ford supplier. i agree with this statement.

[hideyoursheep]

Goddam GM! They could have introduced the new Camaro to compete with the retro-looking 05 Mustang and taken some of that market away from Ford, who basically ran the table on that one.

Mustangs are a dime a dozen now. And all the aftermarket add-ons they came up with? Faghettaboutit!

GM dropped the ball. So did Dodge, who waited too long to introduce the Challenger.
The Chargers are gag-nasty ugly.
I never purchased a car based solely on appearance in the past, but if I were going to use that as a reason for any of the newly re-introduced domestic sport models, I would have to consider it as an investment, and would definitely pass the chance at a Charger, which looks like the fucking trucks in the front, and the Mustang, which are so plentiful, you can't unload it unless you're willing to take a loss. None would be daily drivers of course...not too practical.

[Terry]

Just seems like a sinkhole at the moment...

How much cash has been dumped into that money pit over the last two decades, never mind the last two years...

In all honesty, with all the money being thrown around these days, I'd just as soon see every already previously on-the-books head-of-household in the US be given one million tax-free dollars and let these businesses go the way of the dodo bird if that's what ends up happening.

Either that, or just let the government step in, totally take over these dying car industries and undertake a massive retooling of the existing plants combined with new construction for new plants and just go green. New American jobs for American workers.

The recent government stimulus packages are bold in terms of the cost, but not nearly bold enough in terms of scope and ambition; just tinkering around with old ideas.

Shoot the fucking moon or don't bother to belly up to the bar; no such thing as a little bit pregnant.

[hideyoursheep]

i worked in a UAW shop that was a Ford supplier. i agree with this statement.

I can honestly say that about nearly half of the people everywhere I've ever been....including the Army.

[Romeo Delight]

I can't get past the fact that someone paid the sticker price for a new car.

[Nickdfresh]

I can't get past the fact that someone paid the sticker price for a new car.


Not unless it was a high demand item. I understand if you want a Minicooper, you're paying sticker for it...

[Big Train]

Legacy costs (based on 2005 numbers, add another four years...ouch)

Why GM is so oppressed by legacy costs - BusinessWeek (http://www.businessweek.com/the_thread/economicsunbound/archives/2005/07/why_gm_is_so_op.html)

Why GM is so oppressed by legacy costs
Posted by: Michael Mandel on July 13

I’ve been trying to understand why General Motors is so oppressed by legacy costs, and I think I finally have got it. Look at this table:

1985 Latest* change
employment (thousands) (percent)
General Motors 811 324 -60&#37;
Honda 54 132 145%
Toyota 80 264 231%
*2004 for GM, 2003 for Honda and Toyota
Data: Compustat
GM, a company with 300,000 employees, is supporting the number of retirees appropriate for a company with a workforce of 800,000, almost triple the size.

Meanwhile, Toyota and Honda, both growing companies, are supporting a retiree base which is relatively small compared to their current workforces.

Definitely a case where GM is still being punished today for mistakes it made in the past.

As for the companies, GM and Chrysler aren't going to survive in their current forms. GM is now asking foreign governments for assistance. They will be parted out and the stronger parts will thrive.

As for the Camaro, they made a huge mistake in going with the standard big motor. If they made a "green" decision, say going with a big diesel motor, or some hybrid, you could get a better reaction. They were clearly trying to market to the mid-50's guy who wants one more crack at youth. Collective yawn..