anasazi

i still don't think the full financial situation has been disclosed yet -- something is still hidden somewhere, some bombshell, some huge mass of debt that has been hidden by funny accounting practices.

i'm all for a bailout if it'll actually work but more and more i'm starting to think there really is nothing that can be done, especially as the numbers keep rising.

2MCHPSI

I agree a special bankruptcy that is well organized and govt backed will be a much easier sell to people worried about buying a car at that time. It is pretty clear GM needs to restructure and lose some brands to survive. Bankruptcy is the only they can do it

ForYourMalice

It definitely hasn't. They wanted to use this bridge "loan" to get their foot in the door, and then they were going to keep prying for more - and use the argument that "well, you gave already us $15 billion, but actually its nowhere near enough - so you need to give us X billion, or your initial pledge is going to be in vain." There is no doubt in my mind that this would ultimately go beyond $100 billion if that legislation would have passed. I don't know if I'd go as far as to say the financial statements aren't transparent, but there is definitely more information that they don't want us to see - yet. Now that they bridge loan failed - its on to plan B. Start upping the numbers as a last ditch effort to show how dire their situation is.

SSbaby

Absolutely

It's like having a sick parent who has looked after you for so long... and now the calls go out to kill... to put them out of their misery, forgetting all those years of the support they gave you.

Money talks of course... lest the view from the heart.

guionM

Like I've always said, GM's problem is it's bureaucracy, and that has always been it's problem.

If simply getting a company to agree to no brainer ideas (like using better interior materials or letting the talent that already exists in GM to design better looking vehicles) requires endless meetings, studies, and a tremendous amount of time, energy, and commitment from a Chairman of Global Product, can you imagine what it takes to change GM's culture?

If it takes years to get approval of a car that should be easy to approve, or things done that need to be done, how can one expect even the CEO to get honest information on how the company's really doing? He apparently doesn't even have the power to get a car made. Consider this quote from a Businessweek article (February 10, 2003)
http://www.businessweek.com/magazine...6/b3819001.htm

"During one trip through the design studio last year, he spotted a sexy two-door version of the Cadillac CTS sports sedan. "I hope you guys figure out a way to build that," Wagoner said, but offered no solutions, recalls one senior designer."

The car was proposed in 2002.... and GM finally got around to making it in 2009.

The 5th gen Camaro started back around 1998... and got around to being made (again) 2009.

The last Malibu (also mentioned in the article) was supposed to be the car the current Malibu is.

The reason OnStar is going into every GM vehicle is because GM attempted to expand outside the auto business (like Jac Nasser's Ford), and is attempting to get that money back... same article:
"He seems to have learned from a brush with grand strategic vision back in the '90s, when, like now-deposed Ford CEO Jacques A. Nasser, he explored ways to grow outside of building cars. Wagoner was behind the decision to pump hundreds of millions into GM's OnStar Corp. telematics business and DirecTV satellite-TV service. Neither produced big revenues for GM."

There is no one area where GM doid something that cause this. As with Studebaker & AMC, it took a long time and was a trail of errors that bled the company over many, many years.

SSbaby

If that is true then the middle managers from GM should be sacked.

I know there is some truth to what you say as the Camaro silhouette was definitely finalized some 7 years before the concept lobbed.

Klypto

the argument is that GM can't go bankrupt because no one will purchase an automobile from a company that went ch11. but what if the US tells GM that they will back their warranty for x years. untill they coul possibly be on their feet again. i heard this on the radio a few days ago and it seemed pretty logical. and he also said that this way would be much cheaper than the previous "100+ billion to let them survive" look of it.

in doing this it would keep the confidense with the public

SSbaby

I recall reading a post here from somebody (credit to that intelligent person) for coming up with the idea that instead of the government helping with a loan, maybe they could offer some hefty tax rebates on sales of cars from the Big 3, instead?

Or would that upset the influential foreigners who shape domestic policy in America? (i.e. Japan, Korea, Germany, China etc...)

guionM

Problem is the mere thought of a car company going under is going to have a chilling effect on people about to make the 2nd biggest purchase of their life.

To 99% of the public, Bankruptcy means closing the doors for good, regardless as to what really happens. The point that the government can come in and back up warranty claims rings hollow:

1) If the public doesn't know that Ford makes better cars than Toyota (which they now do by every survey) despite news reports, they aren't going to be swayed by government involvement in warranty claims. If the rating means their car is guaranteed quality and that doesn't change opinions, telling someone a car company won't fail because of bankruptcy is going to be a far worse if not impossible sell.

2) Possibly as much as half of the dealers will close down meaning one may have to go some distance to get their car repaired. Right now, my local Chevrolet dealer is closing. Imagine someone seeing in the news that all these GM dealers are closing down. Think they'll buy a car from that company??? Uh... NO!

The only way out is to loan GM money to tide them over, while at the same time FORCING GM to shed it's bureacracy, streamline it's decision making process to take advantage of it's quickest-in-the-industry product development & testing apparatus, and like Ford, focus on becoming profitable as quick as posible.... an idea that from the outside looking in, to the guy on the streets who just tuned in, seems to have been lost the past decade.

In all fairness to GM, money loaned to Chrysler must also be given with strings attached. Mainly banning Cerberus from selling Chrysler for x-number of years by stipulating that if Cerberus does sell or dismember Chrysler, they have to repay the government loan plus intrest as well as assuming the liability of the pensions of those they lay off over a certain age and responsible for finding positions at other Cerberus holdings for a certain percentage of those under that pension age (I'd put it at 50-55).

Z284ever

I agree completely. A simple "bridge loan" won't do that.


Abso-freakin-lutely. What's to stop Cerberus from taking the money and then declaring BK, and liquidating the whole shebang. I'd go far enough to say that might actually be their plan.

The feds need to have Cerberus - not Chrysler - Cerberus, on the hook for this.

JakeRobb

Something along these lines seems like the best solution to me, too.

This might be the most difficult marketing problem ever. I look forward to seeing the solutions.

JakeRobb

For the lazy, here's your original post:

I'm curious, Eric, what do you mean by 'giving "haircuts"'?

Eric Bryant

It means that various stakeholders would have to accept some percentage of the debt owned to them by GM. Now, in exchange for accepting payments that would be substantially less than the outstanding amount of the debt, there needs to be some assurance that the debt will actually be repaid in some amount - this is where the government could step in and do a lot of good.