If GM folds....

[Juddog]

Question for you car gurus:
If GM folds (now that they're asking for yet another 25 billion and still keep losing money), would the autobuyers of America that were generally buying GM vehicles switch to Ford and Chrysler only, or would you start buying foreign?

The reason I ask is that some of my relatives believe that you should only buy american made vehicles (ie big three), so I have to wonder if Ford and Chrysler would again become profitable by GM collapsing.

 

[Arkaign]

GM won't fold. GM will significantly re-structure if they can't scare enough $$ out of the Gov't though, including possibly/probably an orderly bankruptcy.

The thing that pisses me off about this is that GM makes far superior vehicles overall to Chrysler. Chrysler needs to die, Ford and GM need to scale back, that would be the path to stability for these two.

I don't know any intelligent person who limits their purchasing decision to 'only' domestic or foreign. FWIW, GM, Ford, Chrysler, Honda, VW, etc, are all truly global companies.

 

[StageLeft]

If GM goes Chrysler is already gone, btw.

 

[Arkaign]

Originally posted by: Skoorb
If GM goes Chrysler is already gone, btw.

Due to the supply issue?

 

[Ktulu]

Originally posted by: Arkaign

Originally posted by: Skoorb
If GM goes Chrysler is already gone, btw.

Due to the supply issue?

I'm guessing he means that since Chrysler is in a far worse position than GM, if GM is done Chrysler would have been done long before GM.

 

[Arkaign]

Originally posted by: Ktulu

Originally posted by: Arkaign

Originally posted by: Skoorb
If GM goes Chrysler is already gone, btw.

Due to the supply issue?

I'm guessing he means that since Chrysler is in a far worse position than GM, if GM is done Chrysler would have been done long before GM.

Chrysler is a privately-held outfit, which means their numbers are basically secret, AFAIK. I agree that they *should* be in worse condition, but it's all kind of voodoo to me. Perhaps GM is in bad shape simply because they are such a gargantuan outfit, that their dozens upon dozens of facilities, jillions of workers, and so on is harder to turn the faucet down on than a smaller outfit.

 

[Ktulu]

Originally posted by: Juddog
Question for you car gurus:
If GM folds (now that they're asking for yet another 25 billion and still keep losing money), would the autobuyers of America that were generally buying GM vehicles switch to Ford and Chrysler only, or would you start buying foreign?

The reason I ask is that some of my relatives believe that you should only buy american made vehicles (ie big three), so I have to wonder if Ford and Chrysler would again become profitable by GM collapsing.

Well it depends on how you see things. All those sales could possibly go to Toyota or Honda but the problem most people are concerned with are supplier issues. If GM and Chrysler go town the fear is that they'll take a large part of the supplier chain with them. Less suppliers = less parts = less cars to build = less jobs, etc. Besides, Toyotas and Hondas are boring enough as it it, everywhere I look it's Accord, Camry, Civic, Corolla, if that were to double I would seriously go ape shit.

 

[Strk]

Ford would benefit a lot. Chrysler still has a tremendously shitty lineup.

 

[Ktulu]

Originally posted by: Strk
Ford would benefit a lot. Chrysler still has a tremendously shitty lineup.

I think this suggestion makes a hell of a lot more sense than those GM sales going over Toyota/Honda. If I could personally no longer buy a GM product I will definetly be supporting Ford.

 

[zoiks]

I believe Chapter 11 means 'reorganization'. Their credit will go to shits but I think this will also help them get out of the union contracts. They probably won't shut down as people think.

 

[Aimster]

good luck getting out of chapter 11. They'll be screwed and pull a circuit city

 

[c3p0]

It would depend on how badly it affects the automotive suppliers. If GM goes under it may take a huge chunk of the suppliers down with them. If that happens several of the U.S. based automotive manufacturers may go down with them. Be careful what you wish for.

c3p0
:beer:

 

[GTaudiophile]

I bet China offers to buy out GM.

Can't wait to see what happens then.

 

[Juddog]

Originally posted by: GTaudiophile
I bet China offers to buy out GM.

Can't wait to see what happens then.

Are you serious? I have heard that GM was asking foreign nations to help bail them out as well.

 

[Strk]

Originally posted by: Juddog

Originally posted by: GTaudiophile
I bet China offers to buy out GM.

Can't wait to see what happens then.

Are you serious? I have heard that GM was asking foreign nations to help bail them out as well.

They asked the German and Swedish governments to take a stake (I.e. bailout) Opel and Saab. It's a little different than what they want here in that they want to get rid of Saab and they only want to maintain a stake in Opel.

I'm not sure what they're doing with Vauxhall (UK), Holden (Australia) or GM Daewoo (South Korea).

 

[SparkyJJO]

Originally posted by: zoiks
I believe Chapter 11 means 'reorganization'. Their credit will go to shits but I think this will also help them get out of the union contracts. They probably won't shut down as people think.

This. That is one big problem they have is the contracts, UAW said yeah we need to renegotiate some stuff, so GM got the loan, then the UAW basically refused to do squat.

UAW isn't the only problem but they sure aren't helping anything at all right now.

 

[Chunkee]

Originally posted by: SparkyJJO

Originally posted by: zoiks
I believe Chapter 11 means 'reorganization'. Their credit will go to shits but I think this will also help them get out of the union contracts. They probably won't shut down as people think.

This. That is one big problem they have is the contracts, UAW said yeah we need to renegotiate some stuff, so GM got the loan, then the UAW basically refused to do squat.

UAW isn't the only problem but they sure aren't helping anything at all right now.

So...we are paying for the UAW's nice salary and retirement benefits?

 

[Squisher]

Originally posted by: SparkyJJO

Originally posted by: zoiks
I believe Chapter 11 means 'reorganization'. Their credit will go to shits but I think this will also help them get out of the union contracts. They probably won't shut down as people think.

This. That is one big problem they have is the contracts, UAW said yeah we need to renegotiate some stuff, so GM got the loan, then the UAW basically refused to do squat.

UAW isn't the only problem but they sure aren't helping anything at all right now.

Although I disagree with your statements, let's assume they are right. The Car Czar panel will force whatever it deems necessary or it will recommend either no more money or a bankruptcy.


btw-the biggest negotiation going on is to see who will get a better deal, the bondholders or the UAW. Each is being forced to accept a slice of GM (stock) instead of money. This is exactly why negotiations go on behind closed doors, much to the consternation of the rank and file. If each little give and take was made public there would be so much furor made about something that at the end amounts to nothing they would never get anything done.

 

[MikeMike]

If GM folds, or files for BK, those extra sales will go to whatever company does not begin to have major supply issues... and well, that would go to Hyundai... the ONLY company right now completely weathering ths storm outside of Subaru.

 

[boomerang]

FWIW the suppliers are already going under. Our local paper today has a story about three automotive suppliers. Foamade Industries, Koppy Corp. and Precision Parts International LLC. These suppliers did not file for bankruptcy, they just closed their doors for good.

The stone is rolling downhill and gaining speed.

 

[iamwiz82]

Originally posted by: boomerang
FWIW the suppliers are already going under. Our local paper today has a story about three automotive suppliers. Foamade Industries, Koppy Corp. and Precision Parts International LLC. These suppliers did not file for bankruptcy, they just closed their doors for good.

The stone is rolling downhill and gaining speed.

Wow, PPI closed? They are just down the road from me

 

[boomerang]

Originally posted by: iamwiz82

Originally posted by: boomerang
FWIW the suppliers are already going under. Our local paper today has a story about three automotive suppliers. Foamade Industries, Koppy Corp. and Precision Parts International LLC. These suppliers did not file for bankruptcy, they just closed their doors for good.

The stone is rolling downhill and gaining speed.

Wow, PPI closed? They are just down the road from me

Today's Oakland Press business section. Says they closed in December IIRC.

 

[boomerang]

Originally posted by: SparkyJJO

Originally posted by: zoiks
I believe Chapter 11 means 'reorganization'. Their credit will go to shits but I think this will also help them get out of the union contracts. They probably won't shut down as people think.

This. That is one big problem they have is the contracts, UAW said yeah we need to renegotiate some stuff, so GM got the loan, then the UAW basically refused to do squat.

UAW isn't the only problem but they sure aren't helping anything at all right now.

The deadline for concessions from the UAW is March 31st. So you're statement is factually incorrect. Are you unhappy that they didn't reach an agreement ahead of time because at this point this is the only argument you could make.

I'll stick my neck out here and make a guess that no matter what concessions are agreed to, they will not be enough for you. Right or wrong?

 

[Pocatello]

Unless Obama and Congress are willing to put billions more into GM, it's BK. Even then, it would probably be too late already. GM has started to make pretty decent cars, but so are so many other car companies. Maybe BK is the only way for GM to survive, I don't know.

 

[GuitarDaddy]

What most don't realize is that more government loans/stake or a structured bankruptcy are basically the same thing in GM's case. The reason being a structured bk requires "debtor in possesion" financing and GM is simply too big for anyone to provide the required amount of financing except the government. So either way, if GM is to survive the taxpayer is on the hook.

My questions are:

Can the government save GM? - can they keep it afloat & force the required changes quickly enough to keep it a viable entity?

What are the true econocic costs of a liquidation schenario vs. loans/bk/turnaround schenario?

Assuming either a turnaround or liquidation schenario what would be a fiar ownership stake be for the following groups?
Current shareholders
Debt holders
UAW pensioners
Gov/taxpayers