Will General Motors declare bankruptcy?

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How the H*** can a company have a debt of 276 Billion and NOT be bankrupt ?...
 
$185 billion in annual revenue would extend you some decent credit.

If this sort of income to debt ratio surprises you, think about how much a typical person's home costs vs. his/her annual income. Apples to orange comparision, yes, but same general idea.

Anyways, most of their debt lies on the financing division.


M
 
///M-Spec
$185 billion in annual revenue would extend you some decent credit.

If this sort of income to debt ratio surprises you, think about how much a typical person's home costs vs. his/her annual income. Apples to orange comparision, yes, but same general idea.

Anyways, most of their debt lies on the financing division.


M
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I hear what you're saying there - I just have a serious problem grasping a number of 286 billion - in debt !...
 
i was under the distinct impression that GMAC, their captive finance arm, was the one shining spot in GMs portfolio, and i think they recently sold it too.

right now i think the only things that can save GM is a succession of home runs. the FWD impala and monte carlo are not going to be much more than a bunt. the solstice is a home run, but its not got much profit in it, and for those who would only be able to buy one car in that sort of price range, its not practical enough with the fuel tank taking up most of the trunk space. sp its like a lead off home run, yeah, you got one, but theres lots of game left to play.

heres what they should do.
they are going on with zeta again, the RWD platform. they need to design mega flexibility into that from the get go, and have at least 3 RWD chevys on it; a camaro/ pony car and pontiac equivalent, a big two door coupe ala 60s impala and a 4 door sedan with wagon variant. they have the engines, they have the transmissions, they have the rear ends. careful parts bin scrounging should yeild decent interiors, hopefully a step up from the very blah interiors they have right now.

they need to focus on making profit off the V6 models, and make the V8 (LS1) a $1000 option. i would price the camaro at slightly higher than the mustang GT since you get better performance.

they need to stop kissing the UAWs arse and start playing hardball with those foquers. close plants down and use excess capacity in canada and mexico. the UAW has GM by the short and curlys.
 
///M-Spec
Anyways, most of their debt lies on the financing division.
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Yea but don't they either sell the delinquent accounts to collections agencies? And also doesn't the US goverment give some kind of financial break to delinquent accounts? I sersiouly doubt GM will go "bankrupt". Chrystler will probably go first (hopefully).
 
The number one reason why GM has sucked the past few years....

The car division took over...yes it was a hostile take over, of the truck division. Thus putting more effort into the car section rather then the truck section. This made the truck sales go down, which counts for a big chunk of GM's sales. This is what my boss told me at least.

Also the UAW has sucked a tremendous amount of money from the company proving unions hurt companies really bad when not used correctly.

Finally the sterotype on American cars has hurt all of the Big Three. Not the biggest blow but it does contribute.
 
Five Reasons GM Won't Declare Bankruptcy
Richard Lehmann, Forbes/Lehmann Income Securities Investo
Source: http://www.forbes.com/investmentnew...n-in_rl_1114soapbox_inl.html?partner=yahootix


MIAMI - General Motors recently said that it would have to restate its 2001 earnings by as much as $400 million, spurring fresh downgrades and prompting some analysts to raise the probability that the automaker will declare bankruptcy. The talk about a GM bankruptcy makes for market attention but lacks real substance. Here are a few of the reasons why this is so.

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Reason No. 1: You have to be eligible to declare bankruptcy; you can’t just decide it would be strategically beneficial to do so. General Motors (nyse: GM - news - people ), with $19 billion in cash and a book value of $40 billion, hardly meets that test now or for a number of years.

Reason No. 2: GM doesn’t need a bankruptcy threat to win concessions from its unions. It has Delphi (nyse: DPH - news - people ) to do that for them. When the Delphi bankruptcy is concluded, the unions will know what they can expect to win from GM if they force it to use the bankruptcy route. Chances are, they will settle for something close to the Delphi concessions because they have even more to lose with GM.

Reason No. 3: GM as a business is a very valuable franchise. Before it goes into bankruptcy, it would likely reach a merger agreement with a foreign car manufacturer much as Chrysler did seven years ago when it “merged” with Daimler to form DaimlerChrysler (nyse: DCX - news - people ).

Reason No. 4: Unlike the airlines, GM and its unions have it within their power to fix the problems. There are a variety of ways this can be done short of bankruptcy. The main battle may well be within the United Auto Workers, pitting young workers against those who are either retired or about to retire.

Reason No. 5: A bankruptcy filing would be most devastating to GM shareholders. It is the duty of the board of directors and management to do everything to prevent that from happening. While this principal seems to have been ignored in several recent bankruptcies, it seems less likely to happen here. Besides, we have Kirk Kerkorian watching to make sure this doesn’t happen. I’d be more worried if he had bought GM debt instead of stock.
 
The "Quality" stereotype, yes. It's also hurting Ford's ability to penetrate the Asian market, even if they are using a lot of infusion from Mazda (which has brought quality up a bit). Unfortunately for GM, they are burdened with quite a number of underperforming marquees, both in terms of quality and sales.

GM has made quite a number of financial blunders outside the US, too... the GM-Fiat Fiasco, sinking all that money into Daewoo... (an even worse decision...) Daewoo is supposed to provide GM's bulk sales in Asia and Europe, but it's something that will definitely backfire on them here in Asia... as a lot of people already know that the new "Chevys" are mostly Daewoos, and people who are buying them are finding out how crude they are compared to Fords, Japanese makes and even other Koreans (there's a reason Daewoo died out, you know). After the Optra/Forenza fiasco (poor build, gas mileage that's as bad as a Ford Expedition, no power... typical Daewoo), it's hard to imagine anyone will be willing to buy a new "Chevy" car in the next five or six years here.

GM's other brands, Isuzu and Suzuki are doing relatively well. Suzuki, however, still only has a marginal market in Asia, despite the fact that their new products are pretty nice. Isuzu still has a strong truck fleet presence, but its automotive arm has been going downward for a long time. Before the introduction of the new Chevy truck platform as an Isuzu, they hadn't had a new model in almost twenty years. Their market share is shrinking. Subaru is damn healthy... it's a crying shame GM didn't do anything useful with their Subaru stake.

But it will be quite some time before GM bites the dust, if ever. They have a huge volume, and that counts for a lot, even given the huge debt. Hell, the US has a trillion dollar debt profile, but it's not going under, either.
 
as long as the domestics continue to make cars with acceptable (but subpar aesthetically) interiors then the quality misconception will remain. it took VW making thier cars with pretty much a luxury car interior to get them to turn around.

people base most of thier opinions on cars based on what they see, what they hear, what they feel. seeing is not just seeing the car, the texture of the interior,the depth of the pain. its alos seeing how many comparable cars are on the streets. if i see lots of camries on the streets, then i surmise they must be better.
hearing is not jsut about hearing what people say about the cars, but also hearing how the car sounds, how the various gubbins sound when being operated (windows, locks etc. we had a rental bonneville that was very loud locking the doors. it imparted a sense of cheapness to the car)
feeling is not just how the car drives during the test drive. its also how the switches feel, the seat feels, the texture of the materials.
basically, its the total experience.

GM doesnt seem to get that part. and thats their biggest downfall IMO.
 
Beacuse theyre busy trying to make as much money as possible their infact failing. Just look at porsche they did the opposite and theyre the most profitable car company in the world going by the number of cars sold.
 
JCE3000GT
Yea but don't they either sell the delinquent accounts to collections agencies? And also doesn't the US goverment give some kind of financial break to delinquent accounts? I sersiouly doubt GM will go "bankrupt". Chrystler will probably go first (hopefully).
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I don't know how much of GMAC's debt load is due to delinquent accounts. I suspect it's not much, but I could be wrong. In fact, I no idea exactly where the debt comes from except that most of it is not from the passenger car/truck portion of the company.


neanderthal
people base most of thier opinions on cars based on what they see, what they hear, what they feel. seeing is not just seeing the car, the texture of the interior,the depth of the pain. its alos seeing how many comparable cars are on the streets. if i see lots of camries on the streets, then i surmise they must be better.
hearing is not jsut about hearing what people say about the cars, but also hearing how the car sounds, how the various gubbins sound when being operated (windows, locks etc. we had a rental bonneville that was very loud locking the doors. it imparted a sense of cheapness to the car)
feeling is not just how the car drives during the test drive. its also how the switches feel, the seat feels, the texture of the materials.
basically, its the total experience.
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I agree with this. "Subjective quality" is what they call it. Consider a simple switch on the dash. It can look cheap to the eyes, feel cheap to touch and make a cheap sound when you press it. This switch can ALWAYS, 100% do exactly what it's supposed to do every single time, but because the user's interaction with the switch imparts a feeling of quality --the lack thereof-- the user will still feel the switch is put together like crap.

For better or for worse, this is how the human mind works.



Young_Warrior
Beacuse theyre busy trying to make as much money as possible their infact failing. Just look at porsche they did the opposite and theyre the most profitable car company in the world going by the number of cars sold.
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Are you seriously trying to imply Porsche isn't trying to make money??? :lol:

Are we talking about the same Porsche that whored out it's soul in order to cash in on THIS?

2021017.003.6M.jpg



M
 
Not only whored out its soul, but publicized that it was whoring its soul in order to support its expensive sports car habit.

So that makes Porsche a crack ho, right?
 
Flerbizky
I hear what you're saying there - I just have a serious problem grasping a number of 286 billion - in debt !...
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not that much...the retard in the white house put us into what....7 trillion in debt?

I'd like to take this oppertunity to throw up a random fact


Did you know that Toyota today, is worth more than Ford, GM and Daimler Chrysler Combined?
 
The next MG Rover?

As for the porsche thing they started off as a low profit organisation but because they didnt cut corners and made good cars they were able to capitalise on it and start making a wider range of more affordable models. When porsche made the first boxster they said they couldnt do everyhting they wanted to do because they didnt have enough money. Then the boxster got them rich purely because it was a good car and a desirable marquee and so they were able to make more cars to make more money but never cut corners.
 
The Porsche example is a very interesting one.

Porsche is a very good example of how profit margins versus volume works. Porsche doesn't have a big volume, but by maintaining good quality and desirable products, they have been able to maintain a ridiculuous profit margin for their cars.

It's something Ford is learning painfully with Jaguar... that the added volume gained by sales of the X-Type was not enough to balance the quality perceptions of the brand. And they weren't making enough on each X-Type anyway.

It's also a reason Ford's dropping fleet sales. The sheer volume they got from those may have looked good on paper, but they didn't help profitability at all.
 
I don't believe GM will declare bankruptcy. The current ratio is rather low (higher = better), but the quick ratio is OK. They're liquid, but just barely. They're profitable, so that's not a problem. In terms of solvency, it's not looking good. Debt-to-worth ratio is too high (which explains GM's depressed bond ratings) and there is no working capital.
 
GM needs trucks that don't suck. I barely see ANY silverados or sierras on the road anymore. They also need to stop being such a bunch of lamers, and make cars that are cheap rwd performers. They need not-so-lamer interiors.

What happened to the heavy-chevys that were cool and stuff?
 
I never got the chance to see the news but the commercial for what they were going talking about was on. One story was how Owners are torching their SUVs and then trying to cash in on the insurance. :lol:
 
Young_Warrior
The next MG Rover?

As for the porsche thing they started off as a low profit organisation but because they didnt cut corners and made good cars they were able to capitalise on it and start making a wider range of more affordable models. When porsche made the first boxster they said they couldnt do everyhting they wanted to do because they didnt have enough money. Then the boxster got them rich purely because it was a good car and a desirable marquee and so they were able to make more cars to make more money but never cut corners.
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Um...the Boxster was hardly as successful as Porsche had hoped it would be. The presence of the Boxster actually hurt their sales somewhat, because people refused to buy the "Boxster-looking" 996-chassis 911. They didn't want a 911 that shared a good amount of components with the "poor-man's-Porsche" Boxster. (I don't know about you, but I'd call that cutting corners)

Profits were low, and the company was in trouble. So they built the Cayenne. Now they're über-rich, and even bought a large stake in their sister company, VW.

So don't try to explain to me how the Boxster "saved Porsche." Sell-out or not, the Cayenne sold, and that's all that matters.

P.S. I used to be a Porsche freak before I became a BMW freak. :sly:
 
When they made the boxster they did cut corners because they didnt have enough money. But it was still a very good car with a nice cabin. As far as I knew the boxster sold nearly as many cars as the 911 and the cayenne slotted inbetween the 911 and boxster.

The boxster was the car that kept porsche out of bankrupcy and it only shared about a third of the components.

Overall 911 sales went down when the boxster was first relased but combined porsche was alot more profitable.

Y2003/04: 76,827 cars and trucks (Cayenne: 39,913; 911: 23,704; Boxster: 12,988; Carrera GT: 222)
FY2002/03: 66,803 cars and trucks (911: 27,789; Cayenne: 20,603; Boxster: 18,165)
FY2001/02: 54,234 cars (21,897 units of Boxster, 32,337 units of 911)
FY2000/01: 54,586 cars
FY1999/00: 48,815 cars
FY1998/99: 45,119 cars

The cayenne is the biggest seller now thanks to the americans but porsche were doing just fine before the cayenne.

AUTOZINE
A 4-doors sports sedan named 989 was developed as the successor to the 928, but the top management thought the expensive car was so risky - if it failed, the company would have got into bankruptcy. Therefore the 989 project was axed at the last minute although the development had nearly finished. That was the blackest days for Porsche.

However, the decision seemed correct as the company chose to build a cheap and small roadster instead. That is today's Boxster (986). It shares one-third components with the all-new generation 911, thus saves considerable cost. Both cars were received well by the market right from the start. In addition to the softened Deutsch mark and the fall of Japanese car makers, Porsche became profitable again.
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Young_Warrior
When they made the boxster they did cut corners because they didnt have enough money. But it was still a very good car with a nice cabin.
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I thought you said Porsche NEVER cut corners and isn't out to make "as much money as possible". So which is it?


M
 
///M-Spec
I thought you said Porsche NEVER cut corners and isn't out to make "as much money as possible". So which is it?


M
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They cut corners to their standards but didnt leave the customer feeling unsatisified in the fact that it didnt fall to pieces and the interior was of a high quality.

And it was porsche who actually said they couldnt do everyhting they wanted with the car and had to rush it out or face bankruptcy therefore cutting corners compared to their perfectionist selfs.

But if they never told us no one would have guessed.
 
GM has a long, long way to go before their perception in the US market improves (and even longer until they are looked well upon in world markets).

GM continued to have good sales figures right up until the second oil crisis in '83, even though they had been selling, basically, crap (and this is being kind) for the past 10 years. Even in the 80's, uninspired '70s technology still sold pretty well and GM kept market share.

So if it took 10 (or more years) for GM to loose it's reputation, it'll take them at least that long to win it back. Although all of the new GM vehicles are leaps and bounds better than their predecessors, how long will it take the consumer to realize this?
 

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