GM's cash burn starts to attract attention

From Fortune (http://money.cnn.com/2008/06/19/news/companies/taylor_gm.fortune/index.htm):

The news coming out of Detroit is getting worse, and unlike in past years, there will be no full recovery. Analysts are betting that General Motors will be forced to take emergency financial measures this year that could hamper its competitiveness for a long time to come.

Here's why the damage is likely to be permanent: The sales slump is digging a far deeper hole than seemed possible just a few months ago. June is shaping up as a full-fledged disaster. Expectations are that U.S. sales of cars and trucks will run at an annual rate of 12.5 million, as compared with 16.3 million last year and 15.2 million for the first quarter of 2008. If you are keeping score at home, those are practically Depression levels. Citibank analyst Itay Michaeli expects that June sales for GM (GM, Fortune 500) and Ford (F, Fortune 500) will be down 28% and 27% respectively. Since truck sales alone are likely to fall much further than that, the impact on profitability will be even greater.

There's a cascading effect that comes from such a punishing decline. With the trade-in value of trucks and SUVs plummeting, the companies are left with huge write-offs on vehicles returning from lease. Meanwhile, repeat customers are being kept out of the market because they don't have enough equity in their old trucks to buy new ones.

As investors have sold off GM stock, they have pushed its market capitalization below $8.5 billion. That's only $1 billion more than Cerberus invested in Chrysler last year. If you valued GM on the terms Chrysler got last year, it implies that investors are getting GM's very profitable Asian and Latin American business for free.

With investor Kirk Kerkorian now holding a stake in the company, Ford at least has a committed investor on its side, which is effectively putting a floor under the price of its stock. There is nobody filling that role at GM

This stunning sales decline means that GM is continuing to burn cash at a fearsome rate - perhaps $1 billion a month by some estimates. Rod Lache of Deutsche Bank figures that GM will consume as much as $19 billion in cash over the next two years. Since it began the second quarter with $23.9 billion on hand and needs $10 billion to $15 billion to keep the lights turned on, that leaves a big hole.

The Detroit Free Press (http://www.freep.com/apps/pbcs.dll/article?AID=/20080618/BUSINESS01/806180346/1014) has their own article on the subject. GM's CFO Fritz Henderson has made some comments warning about this over the past year or so, but they've been largely ignored.

Keep this issue in mind as we discuss GM's moves and product plans in the next couple of years - it'll provide at least a partial explanation for the moves GM makes in dealing with the changing auto industry.

I heard the other day that GM's stock is currently on par with what it was selling for in the early 70s! Sounds like it's either a great time to buy if you really believe GM will recover, or one hell of a bad time for anybody that has had GM stock since then.

What exactly is making GM burn all this money?

Is it payroll? Is it intrest on loans? GM's product development programs were supposedly streamlined some time ago to save large amounts of cash. GM's European and Asian arms are generating high relative profits.

I can see money incenerating at Ford. They are piling in short term cash buying out workers aiming for long term savings, they are accelerating pretty much every new car program they can get their hands on, they're spending cash to convert their plants to make some of their more successful Euro and Pacific models here saving development costs. You can actually see where the money is going at Ford.

Chrysler's cash burn in the midst of all this (what little that's seen) almost looks like nothing next to Ford and GM.

So what's going on with GM where the a planet's largest automaker has a market value a mere 13% greater than a small, predominantly North American privately run car company that was once called a truck company that makes some cars on the side.

Why is on earth is GM expected to be burning up 19 billion dollars in a mere 2 years?! :shock:

Just came across an article that says that Ford is in the strongest liquity position (more actual cash and credit to gamble with) than Chrysler or...gasp... GM.

So an argument can be made that right now, Ford is the most well of of the big 3.

http://www.detnews.com/apps/pbcs.dll/article?AID=/20080621/AUTO01/806210327

Overhead costs start to become very visible when sales drop just a bit; with sales slumping in the double-digit range, there simply isn't enough revenue to cover the costs.

Despite the fact that GM has "streamlined" its development programs, they're still expensive - figure a billion or so for a new engine or transmission, and a couple billion for a new platform. The GMT900 might have cost several billion dollars, which is why a high-volume program like that might never be profitable if the sales drop significantly.

GM needs to contribute about $4.5B to the VEBA that was negotiated with the union. This hasn't hit yet, which is bad news.

Steel costs have risen substantially in the last year; with a doubling from $0.40/lb to $0.80/lb, a truck with 4,000lb of ferrous content now costs $1600 more. The market won't allow these costs to be passed on to customers, so this sort of thing adds a couple billion dollars to material costs each year. We haven't yet touched on plastic, copper, and aluminum pricing; those all might add up to several hundred million in additional costs.

GM is on an engineer hiring frenzy; with a rumored 400 open positions, the company will end up adding $50M in salary costs.

GM spends something like $3B each year in interest costs. With its bond rating in the dumps, credit will continue to get more expensive.

The ongoing Delphi bankruptcy consumes a few billion each year. Other supplier bankruptcies drain a couple hundred million.

All those shiny new factories in China didn't come free. GM stated last year that it will invest $3B there in the next three years.

GMAC is losing truckloads of money, and GM gets to foot about half of that bill. It was a billion and a half last year, and probably will get worse as the credit market continues to deteriorate.

Sure, it's only a billion here and a billion there, but it adds up quickly.


So an argument can be made that right now, Ford is the most well of of the big 3.

http://www.detnews.com/apps/pbcs.dll...TO01/806210327

An interesting scenario for a GM near-bankruptcy might be a government-funded buyout, perhaps by Ford :eek: GM's market cap is only $8B right now (that's fairly generous of investors, considering that GM's balance sheet shows a net worth of negative $43B). If GM edges near bankruptcy, expect the stock to drop severalfold; at that point, it'd be easy for a suitor to ask the government for guarantees to cover the acquisition costs and future liabilities (just as JP Morgan bought Bear Sterns for pennies on the dollar using Treasury money).

It should be an interesting couple of years for the auto industry.

With Ohio being hit hard by this Recession, unemployment still way over 6%, and that's not includding people that fell off the grid b/c their benefits expired, or ones that had to take jobs at half or less than they had.
GM, as well as their competitors caused much of their own present "slump" in sales, with losses mutiplied by sudsidaries and suppliers and infastructures, etc...still caught in that race to the bottom, IMHO.

I know a lot of people on the various boards hate The Truth about Cars, but I found this article interesting.

http://www.thetruthaboutcars.com/general-motors-death-watch-181-bankruptcy/

I know a lot of people on the various boards hate The Truth about Cars, but I found this article interesting.

http://www.thetruthaboutcars.com/general-motors-death-watch-181-bankruptcy/

Yeah, that was indeed very interesting - and frightening! The scenario that's painted in the editorial is plausible, and given the sagging sales in the US market along with the troubles at GMAC and the continuing credit downgrades, things look quite bad.

I'd much prefer that things don't go down this way, but as we've seen in other major collapses this decade, big companies can go from viable to bankrupt at a scary-fast speed.

The sky is falling, the sky is falling! :rolleyes:

The sky is falling, the sky is falling! :rolleyes:

I suppose I admire your irrepressible optimism, and I would go so far as to agree with you that bankruptcy is not yet a certainty, but you must realize these are really, really bad times.

GM barely escaped death two years ago by selling its most profitable finance arm (whcih turned out to be a blessing) and restructuring its union contract. It needed a strong market in order to make its Hail Mary product investments worthwhile. Instead, GM is witnessing the biggest downturn in thirty years.

This economy is dangerous for well heeled companies, and has already slayed giants like Bear Stearns. Unless things look up a bit, and soon, GM is very vulnerable.

The sky is falling, the sky is falling! :rolleyes:

Other than the fact that you like GM vehicles (I do, to!), would you care to state your reasons why there shouldn't be worry about GM's financial status?

I've got a lot more at stake than the average forum nuthugger, so I'm not going to apologize if I don't find it quite so easy to respond to unfavorably facts with a glib comment.

I know a lot of people on the various boards hate The Truth about Cars, but I found this article interesting.

http://www.thetruthaboutcars.com/general-motors-death-watch-181-bankruptcy/


What is completely mindboggling is how fortunes have changed for the big 3 almost in a matter of months and then flip back and forth.

Think about it for a second.

Ford was collasping due to recalls and image. Then General Motors had their meltdown right about the same time they had to make a final decision on Zeta cars. Then Chrysler is down because they kept making (and forcing on dealers) vehicles that weren't selling. Then the Ford follies started again. Then GM. For the better part of the past year, Ford has been under a death watch. Now, it's Ford that's in the best position. Talk about needing a score card!

When you look at the history of Studebaker and AMC, the one thing that stands out about the death of a major automobile manufacturters is that it takes a long time. Both took over a decade to flounder, and both involved being bought out by another manufacturer (Studebaker by Packard, AMC by Chrysler). Chrysler, unlike AMC and Studebaker, was very well off when it merged into DaimlerChrysler, and had plenty of new product in the pipeline when it was bought by Cerberus.

All 3 of our manufacturers have had issues for the bulk of this decade, but, they have also pulled out some profit surprizes within the past few years. Ford, of all companies, pulled out a $100 million profit the 1st quarter of this year. Chrysler's sales of the Dodge Ram defied the large truck meltdown till recently. Both Ford and Chrysler have something of a floor that limits how far they can drop. Ford by morgaging it's assets and Chrysler by Cerberus' via Daimler's funding of their labor liabilities and product development. General Motors is now the most venerable. And ironically, despite being the world's largest car maker, a company whose value is barely worth more than the far smaller Chrysler Corperation... let alone Ford... with a much larger, far flung operation to manage.

It still seems shocking that it's going to burn through as much cash as it's expected to.

What is completely mindboggling is how fortunes have changed for the big 3 almost in a matter of months and then flip back and forth.

Think about it for a second.

Ford was collasping due to recalls and image. Then General Motors had their meltdown right about the same time they had to make a final decision on Zeta cars. Then Chrysler is down because they kept making (and forcing on dealers) vehicles that weren't selling. Then the Ford follies started again. Then GM. For the better part of the past year, Ford has been under a death watch. Now, it's Ford that's in the best position. Talk about needing a score card!

It is amazing. Don't forget that ten years ago, everyone was waiting for Ford to pass General Motors. Six months ago we thought Cerberus was going to give Chrysler all the money it needed. Now we have no idea what they have left, given the dire circumstances at many hedge funds.

As recently as two months ago, I had a chance to speak with some insiders, and all they could talk about was how gloomy employees were at ChryCo and Ford.

I think when we talk about any of these companies position relative to one another, it's important to keep in mind that they are all in lousy shape. If one falls, it could bring down the others (not to mention the whole economy).

Talk about needing a score card!



Sort of makes your head spin.

This is why we should continue to support our automakers and not pump money into other economies.

This is why we should continue to support our automakers and not pump money into other economies.

if it were only that simple...

if it were only that simple...


If only GM and Ford had made 30mpg turbodiesel Tahoes, Expeditions, and half tons 2 years ago.:o

What exactly is making GM burn all this money? Is it payroll? Is it intrest on loans? GM's product development programs were supposedly streamlined some time ago to save large amounts of cash. GM's European and Asian arms are generating high relative profits.

I can see money incenerating at Ford. They are piling in short term cash buying out workers aiming for long term savings, they are accelerating pretty much every new car program they can get their hands on, they're spending cash to convert their plants to make some of their more successful Euro and Pacific models here saving development costs. You can actually see where the money is going at Ford.

Chrysler's cash burn in the midst of all this (what little that's seen) almost looks like nothing next to Ford and GM.

Simple..when you make less than you bring in, you have to cover the difference out of your cash assets. If it cost GM $15 billion a month to cover fixed costs, and the make $14 billion they have to pull the other billion from cash reserves. Whats happening now is full size truck sales are falling far faster than GM expected and killing revenue.

Because of this, I am convinced GM is facing a full fledged disaster right now. The full size pickup trucks/ SUV's have been what was paying the bills for this company for years, and now they are not selling (and when they do it is at next to nothing) Truck and SUV buyers can't get out their cars to buy new ones, and then you have alot of other buyers who are defecting to cars and even then progressivly smaller cars. Because cars are smaller cash transactions, and also less profitable than trucks, you have to sell a lot more to make the same money. That is not easy to do when you are GM and have a perception issue with your car line (no matter how false it is). I am willing to bet GM will have to sell 2-3 Camaros/Malibus/whatever to make the same profit they do from one LTZ Tahoe. The one upcoming shining star in GM's linup is the Volt..which will not make money. On top of that, you are facing unrealistic fuel milage standards that will blow a hole in your R&D budget the next decade.



So what's going on with GM where the a planet's largest automaker has a market value a mere 13% greater than a small, predominantly North American privately run car company that was once called a truck company that makes some cars on the side.

Why is on earth is GM expected to be burning up 19 billion dollars in a mere 2 years?! :shock:

Stock is only worth what investors think it is. A company that sells $200 billion in product a year, yet looses money and has legacy costs that are impossible to get your arms around will never be a prime investment target.

if it were only that simple...

I know.

What is completely mindboggling is how fortunes have changed for the big 3 almost in a matter of months and then flip back and forth.


The situation never changes as quickly as the media and "chattering classes" would like you to believe. The situation with the Big 3 did not suddenly get worse in 2005 (it'd be sliding downhill for at least five years prior to that), and it did not suddenly turn rosey for anyone since then - not even for a minute!

I suspect that because the bad news has changed little in the past 3+ years, people have become acclimated to it. Good news was relatively frequent - damn near every product launch has been a success - and so people fell into the trap of believing that there was more good than bad in Detroit. Sure, GM may have had a $37B loss in one quarter, but the new Malibu is selling for $4K more than the outgoing model! That'd be great news, if indeed GM planned on selling ten million Malibus. Meanwhile, material costs have gone up, customers have been buried under increasing debt, and money is bleeding from every pore.

The whole US economy is hemoraging money- fuel costs have what, about doubled in the last 18 months? Why should GM be doing any different from the rest of the US? Customers can't sell their large, guzzling vehicles, and, even if they could, would not be inclined to buy anything that isn't capable of getting 30 MPG-

The debt load that individuals are operating under is crippling the economy, and the increase in costs of everything, fueled by the increasing energy costs, is sinking more and more- not a very rosy picture-

The US economy has been through this cycle a few times in my memory- heck, I remember when leaded gas was less than 30 cents a gallon (and minimum wage was $1.50) but there is going to be a big economic shake-out, and, most likely, the 'little guys' are going to be taking most of the hit- the big-time investors and speculators will be making profits hand over fist, aided by government subsidies and golden parachutes- Isn't this what originally drove Toyota and Nissan to the top of the charts in the early 70's? the fact that they had fuel-efficient cars ready for the market- Here is an opportunity for another company, with low labor costs, to come in with a 'smart car' or some such- check out what is being built in India and China and get back to me-

Great time to buy an SUV or truck if you need one-

I will say one thing...from where I sit, there are a TON of people that WANT to buy cars right now, that simply cannot, because of what they'll get for them. I can buy an '07 Explorer XLT 7 pass from Enterprise for the same price as an '08 Focus, with the same mileage! I no longer accept truck or SUV trades unless I can pre-sell them to wholesalers...like many other dealers around here. I have to do that because I am still trying to sell (at cost no less) all the trades I had prior to the truck/SUV market crashing, that I'm buried in at today's prices.

So now, these customers, no matter where they go, are subject to the market...which isn't paying crap right now, because auctions are FLOODED with these vehicles. I can see GMAC taking a massive hit on return leases. Hell, even I am buying a used truck right now, because I can't see how they'll get any cheaper than now. I don't even need one right now (we bought a new house, and will need a tow vehicle in about a year for horses we plan to buy), but when I can get an '05 Hemi 2500 reg cab Ram with a $4,500 plow on it for $10,800 with 31k miles on it? All a wholesaler offered for it was $10k!! I figure, what the hell...at that price, I'll buy it!

90 days ago, this truck was worth $16k on the open market, easily...its amazing what's changed...

My wife has an 07 Avalanche LTZ with a 48 month Smart buy that we got during some crazy promotion last year.. The way the loan residual was figured, they were assuming a residual value of $35K after 48 months. Seemed insane to me then, and seems impossible now. The KBB on the the truck is just south of $30K after a year. Yet provided GM does not go bankrupt, in 3 years I can walk in and drop the keys on their desk and walk away.

It's really a shame...the GMT-900's are awesome vehicles. We have a freind with an SRT8 Charger, and the our truck is getting better gas milage than them.

It's really a shame...the GMT-900's are awesome vehicles. We have a freind with an SRT8 Charger, and the our truck is getting better gas milage than them.

If somebody buys an SRT vehicle, chances are they are likely to have a heavier right foot than your typical female SUV driver. ;)

I will say one thing...from where I sit, there are a TON of people that WANT to buy cars right now, that simply cannot, because of what they'll get for them. I can buy an '07 Explorer XLT 7 pass from Enterprise for the same price as an '08 Focus, with the same mileage! I no longer accept truck or SUV trades unless I can pre-sell them to wholesalers...like many other dealers around here. I have to do that because I am still trying to sell (at cost no less) all the trades I had prior to the truck/SUV market crashing, that I'm buried in at today's prices.

So now, these customers, no matter where they go, are subject to the market...which isn't paying crap right now, because auctions are FLOODED with these vehicles. I can see GMAC taking a massive hit on return leases. Hell, even I am buying a used truck right now, because I can't see how they'll get any cheaper than now. I don't even need one right now (we bought a new house, and will need a tow vehicle in about a year for horses we plan to buy), but when I can get an '05 Hemi 2500 reg cab Ram with a $4,500 plow on it for $10,800 with 31k miles on it? All a wholesaler offered for it was $10k!! I figure, what the hell...at that price, I'll buy it!

90 days ago, this truck was worth $16k on the open market, easily...its amazing what's changed...

I'm also looking to buy a truck. It is a great time to do it. If I can't get the deal I want on the new F250 (V10, will not pay the extra $5000 for the diesel), then I will probably buy a used 2008 diesel. The price on them is getting very attractive. It will be the 2008, as they drive fantastic, and I will never get rid of it (it will be able to do anything I will ever ask of a truck).

The fuel economy doesn't matter to me.............. I drive maybe 400-500 miles a month.

I guess we are lucky ones. We never used our house for a piggy bank (have lots of equity, even with home prices down a bit........ they never fluctuate as bad here, because it is a place people want to live), and have 1 small credit card. We learned our lessons after 9/11, and have no intention of repeating them. It also helps that my husband is in a recession proof industry (truck driver, hauling propane), and is now the number one driver at his company.

I look at some of the ads for people trying to sell their trucks.......... and they are crazy. NOONE is stupid enough to pay that much for a truck right now.

Frankly, I think alot of them are just panicing. They are willing to lose $10K to save $1000 a year on fuel.

That said, I have been worried about GM for a while now. While some of their new vehicles are very good............. they have been making alot of mistakes also, and dumping money into money pits. They have also been floundering on decisions........... and really seem to have no idea what they are doing next. The only GM ads I have seen, on TV, have been for Saturn, and for trucks. TRUCKS. Why trucks??? Don't even get me started on their idea of changing the name of the upcoming Cobalt replacement.

They really need a Mulally.

That said, I have been worried about GM for a while now. While some of their new vehicles are very good............. they have been making alot of mistakes also, and dumping money into money pits. They have also been floundering on decisions........... and really seem to have no idea what they are doing next. The only GM ads I have seen, on TV, have been for Saturn, and for trucks. TRUCKS. Why trucks??? Don't even get me started on their idea of changing the name of the upcoming Cobalt replacement.

They really need a Mulally.

I too have been wondering about GM lately. Sure, they have some good things in the pipeline, but they don't seem to be thinking as tightly as they seemed to be a few years ago.

Killing a hot styled RWD Impala simply because of 1 mpg seems pretty kneejerk to me. Showing the Chevy Beat (in New York of all places) then saying you have no plans to sell it here because it supposedly isn't engineered for US standards (which I didn't get since it wasn't even engineered yet... it was a concept!) then suddenly say it will be here in 2 years after gas reached $4 per gallon sounds more like foot dragging and the old GM. Making a deal with the CAW, then weeks later unexpectedly announce closing a plant that must have been planned (and not mentioned) during negotiations doesn't seem right.

I know that GM (and other companies) don't cast their decisions in concrete till the tooling is in place in the plants. But GM's decisions of late outside of product decisions seem to be a little scattershot IMO.

I agree. The company is giving off the impression that they are reacting and that they are panicking.

I almost wonder if they don't need some new guys in there at the top. This is not to say Wagoner has been bad - he's made some tough decisions during his reign - but it might be time for someone new to come in and shock the culture there.

Frankly, to me, they are operating like a company in pure panic mode.

This boils down to strength in leadership. At Ford, they are buckling down, and making decisions............. quickly. They are spending the money that they need to spend to make it happen. This is where the leadership of Mulally can really come into play. Don't whine about what is happening........... give me solutions............ NOW. Make them happen............ NOW. Now is the time to show that the auto industry can get off its ass, and do it quickly (well, quickly in auto industry time. LOL). That loan that Mulally secured, right after starting at Ford................ alot of people sure did criticize thim then........... is starting to look pretty damn smart. Especially when you take the meltdown of the credit industry into account.

Now, I'm not saying that Ford is out of the woods, or anything close to that. There is a long haul to go, and a lot of unknowns (like when the public will pull their heads out of their asses)............. but they seem to be making good decisions. Hell, at least they ARE making decisions. People may hate the Kirk........... but I doubt he would invest a bunch of money in a family owned and controlled company, is he didn't feel he would make money. He didn't get to be incredibly rich, by being incredibly stupid.

I think it is time for Rick to go.

Frankly, to me, they are operating like a company in pure panic mode.

This boils down to strength in leadership. At Ford, they are buckling down, and making decisions............. quickly. They are spending the money that they need to spend to make it happen. This is where the leadership of Mulally can really come into play. Don't whine about what is happening........... give me solutions............ NOW. Make them happen............ NOW. Now is the time to show that the auto industry can get off its ass, and do it quickly (well, quickly in auto industry time. LOL). That loan that Mulally secured, right after starting at Ford................ alot of people sure did criticize thim then........... is starting to look pretty damn smart. Especially when you take the meltdown of the credit industry into account.

Now, I'm not saying that Ford is out of the woods, or anything close to that. There is a long haul to go, and a lot of unknowns (like when the public will pull their heads out of their asses)............. but they seem to be making good decisions. Hell, at least they ARE making decisions. People may hate the Kirk........... but I doubt he would invest a bunch of money in a family owned and controlled company, is he didn't feel he would make money. He didn't get to be incredibly rich, by being incredibly stupid.

I think it is time for Rick to go.

You can count me amoung the group that was wondering what Mulally was thinking when he sold Jaguar, Land Rover, and then morgaged pretty much the entire company for cash. And you are correct... today he looks 100% right on target.

It was a mere year and a half ago that Ford locked out the chance of the Australian Ford Falcon being made in Left Hand Drive to protect the Crown Victoria. It wasn't much before that that Ford made decisions that prevented the upcoming new Mondeo from being made here in the US or even imported. Today, almost overnight, Alan Mulally made decisions and overrode many senior Ford management in making Ford as close to instantly as possible, a truly international automaker.

Rick Wagoner has done an outstanding job getting GM back into making good cars. Other CEOs in GM's past might have answered the downturn with killing off vehicle programs, and certainly would have never approved of cars like the Solstice, Camaro, and what might be the planet's fastest sedan, the upcoming CTSv. The most expensive GM car wouldn't be an exotic Corvette, and that CEO still might have dumped more money in large trucks and SUVs putting GM in a far worse position than it already is. So I in no way thing Wagoner has done anywhere near a bad job. But I think GM needs a single person who has the power to make decisions, overide people, and not just cut through red tape, but to completely ignore it the way Mulally has been empowered to.

Bob Lutz was given alot of power, but he still has to convince the board before he can move forward as well as jump through hoops. It took Wagoner-Lutz-Welburn combined to create a a somewhat diversionary strategy to get the Camaro produced. If these three combined had to create something like this just to get a winner like the Camaro produced, then GM resembles more of the old behemoth than it does a new agile automotive company.

I almost think of Wagoner at this point as the manager of a losing baseball club.

It's not clear that he's doing anything wrong, and ultimately, it's up to the players to go out and win. But at some point, he just became ineffective.

Perhaps someone new would be able to burn through all the red tape and get things done quickly.

The perhaps here is a big qualifier. It's equally possible that the board would completely rebel against an outsider and that the company would freeze. The problems with GM truly are endemic to the entire organization.

Even if GM had it's very own "Mulally", I'd doubt that he could make the sweeping decisions or things happen as quicky as Mulally has at Ford.

This is where the family owned and controlled nature of Ford actually works. As long as you have the blessing of the Chairman of the Board (Bill Ford Jr.), you can pretty much do what you feel you have to do.

This is in stark contrast to GM, which is really a slave to their board.

In times like these, where decisions need to happen fast............. and be implimented even faster............ being slave to your board is about the last thing you need. Hell, you can't even get 10 people in a room to decide what they want for lunch.............. much less the direction of an entire automotive manufacturer.

I do think that a stronger leader would help though. Someone to bust through the doors, and say "This is what we need to do.............. approve it !!!"

It's really time for Wagoner to go, and not just because of the latest round of bad news. He's been CEO of GM since 1998 and in charge of NAO since 1994. During that time, how have GM's fortunes fared? Well:

- They've lost market share in every year except one (IIRC).
- They've lost more money than almost any company if history.
- They lost their spot as both the largest corporation in the world, and the largest automaker in the world
- On the product side he's still playing catch up, with probably at least two barely-average cars for every good one produced under his watch.
- Billions of dollars were thrown away on failed alliances and acquisitions (e.g. Fiat, Isuzu, Subaru, Saab)
- And while he's throwing money at underperforming businesses, he's selling all the profitable ones that could help balance the cyclical auto biz. How nice would it be right now, when sales are heading to the 12m range, to have the steady cashflow and profits of a Hughes, EDS, DirecTV, GM Defense, or Allison Transmission? Most smart companies get rid of underperforming units and keep the good ones ... GM does the opposite. Is it any wonder their market cap is only $13b?
- During this unprecedented slide in marketshare he still hasn't done anything to address GM's archaic brand structure ... we now have 8 divisions totalling about a 20% marketshare. And they're still badge engineering cars to compete with each other, often in the same showroom, just like in the 80s!

Maybe it would have been better of Ghosn/Kerkorian had been successful in gaining control of GM. Ghosn certainly did a lot more for Nissan in a far shorter time period than Wagoner has done for GM in most of his career. Sure, it would have involved massive changes to GM, but look where we are now. Wagoner's slow, incremental changes have done nothing but lead GM down to the brink of bankruptcy ... it's quite conceivable that massive changes are going to be forced on GM instead of being managed from within on GM's own terms and timeframe.

To me these are the same problems that GM has had since it stopped being the innovator and auto leader and became a company that reacts to the market and competition instead of having others react to it. It's like GM left the 60's and then started playing the auto game not to lose. That's a big difference than playing to win.
It's odd too because it's not like they stopped taking chances but when they do the idea got lost on the way to production and the bureaucracy took over and then it just became another product that GM had to support instead of the products supporting GM.

I've never been one to say cut brands as I've loved the idea that someone could start with Chevy's and move up the lines to a Caddy one day. But that plan takes discipline and it means a Caddy can't be priced in the Chevy range and there needs to be sales to support all of this.
But it seems that GM is almost a slave to them just so they can fill their showrooms. They have to spend extra money on design and production and then marketing just to make the Cobalt and a G5 "look" different so they can be sold at two different brands.
They may not need to cut brands but should cut model re-badge and overlap. If that means Pontiac doesn't get a G5 and Torrent then so be it.

That is very true. They need to stop talking about avoiding overlap and just do it. If the dealers don't like it I suppose they can sell something else. If you make good products, and people want to buy them then you won't have a problem finding someone to sell them to the customers.

I partly don't understand the relationship that GM has with the dealers and what their obligations are. Are they legally bound to make certain cars for them? Or are they just bound to continue making Buicks, for example regardless of how many actual models they produce?