There's a thread named "The Fall of GM". However, the way things are playing out, it seems "unraveling" is a far more accurate account of what's really going to take place. And, make no doubt about it... it IS taking place.


The past week, we've seen Saab file for bankrupcy, Opel plunge into the process of becoming independent, and accountants creating a "Note Of Concern", which effectively says they don't believe GM can continue to operate as a business any longer. Countries where GM is looking for taxpayer financial help has governments setting preconditions for loans that focus on preserving jobs in their own company.

The "Note of Concern" will be the biggest, most critial hit to GM next to the March 31st review. This would instantly wipe ot any new potential investors (destroying what little value GM stock still has). It also would make borrowing money impossible even during great times. Finally, this will no doubt influence the US government's decision on March 31st as to whether to loan GM any more taxpayer dollars or recall the loans made so far. If loans are recalled, GM will almost certainly into partial liquidation, and perhaps even shut down for a time.

Although General Motors is far too big to completely collapse, it's glaringly obvious to even the most hardcore GM supporter that on April 1st 2009, barring an "Direct Act of God", the General Motors Corperation that exists today will no longer exist. But again, that doesn't mean complete destruction.


Daewoo is ironically not directly owned by General Motors North America. It was GM-Holden Ltd. of Australia along with Suzuki & Shanghai Motors (GM's China partner) that purchased a 66.7% share of Daewoo as well as a permanent seat on Daewoo's board of directors.

Speaking of Shanghai, General Motors North America has only a 50% stake in the company (they don't own most of the company). With everything except the Cadillac line and the Lacrosse coming from Holden, Europe, or Daewoo, a separation between GM-NA and GM-Europe (Opel) and GM-Asia (Holden) would seem to indicate some changes in store there.


I often use the unraveling of the Roman Empire as an analogy for General Motors. Rome overexpanded, and it became too expensive to maintain. Conqured territories had to send back a portion of their goods or money back to the city of Rome, and it's citizens reaped the benefits. Eventially it's conqured territories began running dry, and the expense of keeping a massive military to hold onto these territories was wiping out Rome, and the empire eventially split between the east and west. The west (which included the original seat of power, Rome) was the weaker of the 2, and it eventially disintergrated into kingdoms and a good chunk today's countries of modern Europe. GM seems to be falling into the same situation.


Right now it seems that GM Holden is the wild card. Holden is a subsidiary of GM, whose ownership (like Opel) is achieved through a controlling intrest (or via Australian law, simply the ability to dominate decision making even with a comparatively low percentage of ownership).


With Opel shrinking GM's share of the company down to 25% (with no cash compensation!) as a condition that GM-NA recieve none of the money the government will give them, Holden might find itself in the same position if it's sales become critical and they need additional money from the Australian government. At the moment, next to GM-China, Holden seems to be the GM division is the best shape. It's local operations are heavily based on exports. Like everyone else, they are being hit hard, but it hasn't quite gotten to the "government loan or die" stage yet.


If Holden (GM Asia) and Opel (GM Europe) were to reduce GM-North America's influence, or "wall themselves off" from North America, they are fully capable of being completely independently operated.

Which leaves GM's North American operations.

There is no doubt whatsoever that Chevrolet will survive. As the largest car division in the US, with a range of models that includes trucks, cars, and sports cars, as well as over 50% of all GM North America sales, Chevrolet will most certainly survive.

But I wouldn't be so sure about anything else.

To pay back the government and creditors, GM North America is going to have to liquidate a massive portion of itself.

Buick has already moved to China. GM can offer up a portion or most all of it's 50% intrest in GM China for money to pay creditors.

GM can also sell Cadillac. It's sigma based vehicles as a group can be sold to a private investor or even used as a deal sweetner to Shanghai, GM's China partner. If GM continued to supply Escalades and SRXs, that would leave Cadillac only partially owned by GM.



GM is already losing it's global reach. Opel is bailing & Saab's in bankruptcy. North America is headed towards certain partial liquidation. GM's 50% stake in their China operations and a good portion of Cadillac are sitting as fat, juicy targets when things start getting sold off.

Contrary to popular belief, GM doesn't need to sell off everything to 100% cover it's accumulated debt. GM simply needs to sell off enough to return to viability... the potential to become profitable AND pay off any debts it has over a reasonable period.

That could be done with GM North America turning into Chevrolet the way GM Europe is Opel, with most everything else sold off. GM global would become more or less a loose global allience of car makers that (much like Chrysler and Mitsubishi has over the years) shares various components, structures, and powertrains.

That's the most likely future of GM.

 

It does not look good for GM.
It seems with every passing day, more is revealed about their true condition.
I just don't know how GM can be made viable going forward. I don't have enough knowledge of big business management, nor do I have any idea of what goes on behind closed doors at GM.
It just doesn't look good.

 

so.............. can I still buy a new camaro?

 

If that's what it takes for Chevrolet to survive, then so be it. I love me some Camaro/Corvette/Chevy trucks, and I want to see them make it through this, stronger than before.

 

And maybe Congress (lack of progress) will require the current board of directors to step down, and be replaced by people who know remotely something about anything.

 

So, would Holden open up operations in North America? I've always said IMHO that It would be a good idea to do so...

After owning my G8 I'd gladly become a Holden man!

 

As time goes by and truths become apparent this scenario certainly seems inevitable. My question is does this all completely unravel the efforts GM has made in the past couple of years to integrate its formerly disparate (and once again) divisions into a global whole? It looks to me like it does.

Honestly I would never thought to see this in my lifetime. It's akin to the sky falling. When I was in college in the late 80's GM had about 866,000 employees. Even now it's a shadow of it former self and is still too big.

In the end it may be only Chevrolet..... all the hand wringing over whether or not there should be a Saturn, Pontiac, Buick and GMC will be moot. Talk about a hard reboot.....

 

If 10 years ago you were to draw up what the absolute worst case scenerio GM could face would be...the last 12 months are it. From gas prices, to the credit crisis, to having to borrow money from the most green leaning administration ever.

The real wild card here is the Obama administration. My hope was that he would move towards the center after being elected since most American's are there. However the fact that despite a $1 Trillion plus deficit, his budget topped it off with $600 Billion to fund a health care program that does not yet exist is evidence there will be no center.

That kills my original hope was that there would be a chance that maybe Obama's administration would realize GM is a business that needs to be competitive on a global level. I was hoping some of the fuel economy rhetoric from the campaign would fall by the wayside untill GM could first be stablized and made competitive.

This is now obviously not gonna happen. The bailout as we see it today is nothing but GM and Chrysler being turned into a pawns in the big green drive. GM is teetering on bankruptcy, and the administration is already dominating meetings asking what they are gonna do to make new fuel efficiant cars? Hell, they can't pay the electric bill! The 800lb Gorilla in the room is of course that every other automaker can still make whatever they want. So where GM and Chrysler will be saddled with a lineup of uncompetitive ecocars where Ford, Toyota, and Honda can make whatever they want.

Make no mistakes about it...a GM bailed out with restrictions on what product it can make will be one that is not structurally competitive. Unless the government plans to subsidize it eternally like Amtrak, it will fail when the economy is better and people can buy what they want.

 

I think if just Chevy survives and remains an American company, that GM would consider itself lucky.

 

How so? Holden don't design their own engines. They use either Opel or GMNA engines in their product... and then there's the VM Motori diesels.

 

Isn't it kind of Ironic that the big GM bought all these car companies, ruined them (save Chevrolet&Caddy); and now they could be spun off to "legit" car companies again...

I've said all along that the US car market would be a lot cooler if Chevrolet, Pontiac, Buick, Cadillac were all their own unique companies like they used to be...

Oh well. Looks like Pontiac will be no more, GM essentially ruined that brand. Who here rememebers the old Pontiac 400 and 455... Sad.

 

Thanks for laying it out so clearly Guy.

If that's what it takes to have a strong, viable and profitable Chevy that can go head to head with Toyota and Ford and ends the blasted turf wars that keep Chevies from being the best they can ..... I'm all for it. Hopefully Cadillac can stay in the family as well.

Rebadge the G8 "Chevelle" as a sister to the Camaro, make the Solstice a Chevy, convert the Denali line to "SS" but give it an "SS" suspension makeover and we're good to go.

 

but hey remember if GM faulters and cuts out all but one or two companies. You think Americans will buy a caddy owned by a chinese company? Or an Indian Hummer?

I think that people have no clue walking into Wal Mart and buying any POS made in China they do not care. But I think they wil finally wake up when an Americn icon like GM splinters off with classic names and brands that will end up in foreign hands. I think then people will open thier eyes to the real truth.

And personally I think if GM fails like this. I don't think you will see a few foreign companies here building cars still just go back to importing them.

Way to go America...transplants..more like cancer. They beat us at our own game!

 

Sounds like a reasonable plan, but man I would hate to see Cadillac sold to China.

If the worst happens and GM gets fully liquidated, I'd like to see Ford buy the Corvette brand.

 

What has the government done besides.... loan GM billions of dollars that most likely they will never see back?

Can you name me one... just one..... of these supposed "green" vehicles that the government is forcing GM to make?