Inventories are high, plants are closing, (some will be "mothballed" indefinitely), healthcare costs are increasing, car and truck sales are plummeting, stock prices are going down, financial institution ratings are going down, market share is going down, this whole Fiat thing doesn't make me feel any better either.......


Is GM in some real trouble?

 

The Dividend on GM stock pays 5.7% annually.

I think the sales can be fixed by lowering MSRPs and offering better warranties.

Healthcare costs are a BIG problem.

 

They are not cutting enough off the MSRP's to make a diffrence. Even then, they need to do it on the cars, not just the SUV's.

 

The media has a tendancy to publish only the negative...

Bright side stuff:

Lordstown Assembly is working overtime.

G6 sales are ahead of Grand Am sales for YTD figures... a market split in the same showroom while both cars are available, and Grand Am has higher rebates.

GTO sales are up like 75% versus last year, with no rebates on the 05's which account for 2/3 of the sales this month... which is February btw, not exactly RWD sports car season.

LaCrosse sales are ahead of Century sales versus last year....

Malibu sales on are fire....



Sure, there are some bad things, but there are good things too... every company has to deal with stuff. GM just needs to handle it.

 

Cut the red tape.

 

Chapter 11 before '06. Count on it.

 

Interesting thought...............

 

The break even point for GM is 24% market share. For February GM was at 22.7% market share. If they can't rebound, and the reasons you gave say it will be very difficult to, Chapter 11 is the only way out. The new products aren't getting the job done.

 

But Chapter 11 certainly wouldn't be a "knee-jerk" reaction... I would think GM could run in a money-losing fashion for sometime before resorting to a bankruptcy.


If that is the "break even" point, they have been operating above that for a long time... and they should have cash reserves.

Even taking that all out of the equation, I'd imagine product lifecycles would increase, certain projects would be put on hold or cancelled, etc to save money before declaring Chapter 11.

 

I just can't understand what it is about GM's culture that prohibits it from releasing all the talked about "gotta have" products?

Products like Chrysler's 300, Ford's Mustang, BMW's Mini Cooper, the original Chrysler minivans, the PT Cruiser (HHR is about 5 years late), the original Miata (Kappa's about 15 yrs too late...see PT Cruiser).

I'm not talking about products that are nice and get all the 16 year olds on message boards to say " that's badass, I'm gonna buy one when I get a job".

I'm talking products that make John Q. Consumer...stop in his his tracks, drop his jaw...and break into a cold sweat.

What is the problem here?

 

Could it be that the car GM cancelled, the Camaro, be the only car that can save them? Not only could it be a hot seller if done right, it would bring a lot of people to GM's lots...

Would that be irony?

 

I dont get how we can equate market share to break even point. For example, GM sold 21,000 Cavaliers last February vs. ~10,000 Cavis and Cobalts this February - higher marketshare last year. However, they lost money on (almost?) all of those Cavaliers, and they're only losing money on 3,000 of them this year.

The quarterly earnings should be interesting.

 

Judging from what ive seen at the auto show, horsepower is in style. So id say its quite possible.

 

Quarterly earnings will be skewed due to the $2B payout to Fiat?

Chapter 11? RIGHT...we don't have any doomsdayers on this board. I think GM had $32B in available cash at last count. I read a Wall Street Journal article a couple weeks back where they were talking about the Fiat ordeal, and while everyone seemed to agree in the article it was a setback, it was a minor one at best...and would create barely a blip in GM's overall operations.

Chapter 11? I give it a less than 1% chance, period. Their bond rating would suffer even more, suppliers would get screwed, etc. Won't happen guys. Remember, you heard it here first I analyze companies for a living (selling cars is more of a hobby) as a Credit Analyst for a commercial bank. Chapter 11 isn't just some random idea to be thrown around...its serious. And GM doesn't need to do it, nor will it.

 

Detroit News had an interesting article on the Big Three and Chapter Eleven a short while back.

http://www.detnews.com/2005/insiders.../A01-56205.htm