GM Down to its Last 34 Billion Dollars
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GM Down to its Last 34 Billion Dollars
http://www.thetruthaboutcars.com/gm-...-its-last-34b/
i pray they dont tank before the camaro comes out
In his first conference call with automotive analysts, freshly-minted GM CFO Ray Young said that his employer has $27.3b in cash and $7b in undrawn credit lines upon which to draw. Although that ain't hay, subtract the $10b GM needs to keep the lights on, consider the company's ongoing cash conflagration, factor in declining sales and the American Axle strike's effect on cash flow, remember that GM lost $10.6b in 2005, keep in mind that GM's already sold the family silver and… the automaker's liquidity isn't quite so reassuring. But don't take my word for it. "As CFO, my priority is making sure this place is funded," Young said. "While we believe the industry (in U.S. sales) will be in the low 16 million units, we have triggered actions right now to make sure we start to conserve liquidity." Automotive News [sub] reports that GM's Beancounter-in-Chief revealed that GM is postponing [unspecified] non-product related capital expenditures from the first half of '08 to the latter half of the year– and beyond. "If the market doesn't return, we will defer that further into the future," Young said. GM's CFO said the suits are now running the business on a "quarter-to-quarter" basis. Oh, and Young said that GM ran about 940k units of dealer stock the end of February, roughly 125k units below the level at this point last year.
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The whole story hinges on a seriously flawed assumption that the situation is static. However GM has a multitude of options, and there are a lot of variables in the world auto markets as well, that could affect things involved.
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From: Irving, TX
I read an article on the truth about cars where they talked about the gmc acadia. They really only pointed out what they considered flaws, which weren't many (they didn't like the glide rails).
Then, they compare the mileage against a Rav4. They are pretty one sided, and the side is anti GM.
EDIT: Here is the article I mentioned.
http://www.thetruthaboutcars.com/200...acadia-review/
Then, they compare the mileage against a Rav4. They are pretty one sided, and the side is anti GM.
EDIT: Here is the article I mentioned.
http://www.thetruthaboutcars.com/200...acadia-review/
Last edited by Plague; Mar 21, 2008 at 11:41 PM.
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From: Michigan's left coast
What's funny is that everyone here wants to attack the credibility of the source, when what's being reported here are numbers and the words of GM's CFO. Seems to me that folks here just don't like the bias of the facts.
Check out GM's balance sheet - for the currently-displayed periods (31-Mar-07 through 31-Dec-07), damn near everything is trending in the wrong direction.
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From: Ontario
The bad thing about this situation is that GM is out of assets to sell in order to raise cash. GM used to have some measure of diversification, but over the last 10 or so years has sold off pretty much all of their non-core assets: Hughes, EDS, DirecTV, Allison Transmission, half of GMAC, GM Defense, medium-duty trucks. There's nothing left to sell. If they hit another rough spot their only option could be to mortgage their factories like Ford had to do. But the last thing their balance sheet needs now is more debt.
What's really sad is that most of those units that GM sold were fairly reliable profit and cash-flow generators. Meanwhile the core automotive business has lost money in most years. To make matters worse, GM took some of the money raised by selling profitable divisions and invested in even more money losing car companies like Saab and Fiat. So rather than have a balance to the cyclical and uncertain automotive business, GM leverages itself even further into the business where they haven't figured out how to reliably make money.
What's really sad is that most of those units that GM sold were fairly reliable profit and cash-flow generators. Meanwhile the core automotive business has lost money in most years. To make matters worse, GM took some of the money raised by selling profitable divisions and invested in even more money losing car companies like Saab and Fiat. So rather than have a balance to the cyclical and uncertain automotive business, GM leverages itself even further into the business where they haven't figured out how to reliably make money.
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given that the majority of US vehicles are drastically overpriced...
I would NEVER buy an asian car. I live in Detroit.. it's probably just how I was brought up. I blame the hippies in california. Et's.. not MPG's.
I would NEVER buy an asian car. I live in Detroit.. it's probably just how I was brought up. I blame the hippies in california. Et's.. not MPG's.
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Oh no! Our very last $34 billion! Why, that's dwindled down from the $20, billion we had two years ago! Oh, wait...
GM has MORE liquidity now than they did a few years ago. The GMAC sale accounts for only $1.4 billion of that, if I understand correctly. Add to that the significantly reduced employee obligations thanks to the new UAW contract, and the company's balance sheet looks as healthy as you might expect for a company in the middle of a turnaround. The CFO's concerns are no different, I'd wager, from the worries being raised in every company in nearly every industry right now. They are worried about a recession.
What bothers me about Robert Farago and TTAC is how much of a one dimensional story this has become for him. He's become so attached to the story of GM's bankruptcy that he's continuing to follow it regardless of context. I am a journalist, and can tell you for a fact that this happens to journalists. They invest their time and effort into a story, and cannot concede that there might not be as much there as they originally thought.
GM has MORE liquidity now than they did a few years ago. The GMAC sale accounts for only $1.4 billion of that, if I understand correctly. Add to that the significantly reduced employee obligations thanks to the new UAW contract, and the company's balance sheet looks as healthy as you might expect for a company in the middle of a turnaround. The CFO's concerns are no different, I'd wager, from the worries being raised in every company in nearly every industry right now. They are worried about a recession.
What bothers me about Robert Farago and TTAC is how much of a one dimensional story this has become for him. He's become so attached to the story of GM's bankruptcy that he's continuing to follow it regardless of context. I am a journalist, and can tell you for a fact that this happens to journalists. They invest their time and effort into a story, and cannot concede that there might not be as much there as they originally thought.