Category Archives: GM
Catastrophic Chain Reaction that will eliminate around 3 million jobs.
– Government will loose around $150 Billion in revenue
– Part Makers will Shut down and will be out of business.
– Sales would plummet as consumers will loose interest
– Rental car companies, purchasers of about 15% of GM’s volume, would get nervous, too. They often sell their used models back to the auto maker. They’re worried they would have to liquidate the cars themselves if GM went bankrupt, says Maryann N. Keller, a longtime GM watcher who sits on the board of Dollar Thrifty Automotive Group Inc.
– If GM went belly-up, retirees, workers, could all take a hit
– GM’s creditors would also stand to suffer. The company has $31 billion in long-term debt, most of it due in 2023 and beyond.
GM and Ford reported they spent a combined $14.6 billion more than they took in last quarter. GM said it could run out of money by the end of the year. Ford said it could last through 2009, but only because it arranged a hefty credit line last year.Next week, Congress plans to consider giving the auto industry part of the $700 billion Wall Street bailout during a lame-duck session.
On the other hand “Bankruptcy could do great things for GM,” says William J. Rochelle III, a bankruptcy attorney with Fulbright & Jaworski LLP. But, of course, Chapter 11 is no sure bet. History is full of examples of companies that have emerged from bankruptcy simply to return in a few years.
As airlines and steelmakers have done, GM could use Chapter 11 to rewrite union contracts, potentially enabling it to slash retiree benefits and close plants without having to pay furloughed workers. The auto maker could even dump tarnished brands and get bankruptcy court protection from dealer lawsuits.
General Motors Corp. said Friday that bankruptcy is not an option being considered despite the “unprecedented challenges” posed by a weakening economy.“Bankruptcy would not be in the interests of our employees, stockholders, suppliers or customers, and we believe speculation about a possible filing is exaggerated and nonconstructive,” a GM spokesman said.
Instead GM is in talks with Chrysler for a possible merger. General Motors Corp., Chrysler LLC and Cerberus Capital Management LP have held preliminary talks about a merger or an acquisition of Chrysler by GM.
Ford sold Jaguar and Land Rover earlier this year to Tata Motors for 1.15 billion , and according to sources Tata Motors might also be buying a stake in Mazda Motor Corp.
The auto industry has been hit hard in recent weeks by the effects of the credit crisis, prompting GM and Ford to issue statements Friday to dispel the notion that they might be headed for bankruptcy. GM and Ford shares were battered with the rest of the stock market this week, falling to lows not seen in decades.
Ford shares have plunged to a 26-year low at $1.99 and its U.S. rival General Motors Corp to a nearly 60-year low to $4.89
Auto Industry is feeling the heat from the credit crunch in the US market and is heading south
General Motors reported that sales of cars and light trucks dropped 16% compared to September a year ago. Sales at Ford tumbled 35% from last year and Toyota says September sales down 32.3%. Chrysler LLC sales are forecast to drop by 37%.
Auto industry is starting to look like the Real Estate market (though there have been no bubble , like we saw for housing ) , but analyst predict that as many as 3,800 U.S. car dealerships could fail this fall and into 2009 — nearly one in five — because of weak sales, increased operational costs and the credit crunch.
If on an average a car dealer employs around 50-60 employees , we are looking at a minimum 200,000 job losses. And if these auto giants start to go bankrupt the amount of job loss is unimaginable.