[C/K Man]

Great article, and some great posts, too. But, I can't help but think this is all just another round of rearranging the deck chairs on the Titanic. It is obvious that Pontiac, Buick (at least in the US), SAAB, Hummer, and GMC (maybe not the commercial trucks) need to be discontinued. Equally obvious there are far too many dealers as well. However, I think GM's real problems are cash burn, market share, and Delphi. So, let's talk about cash burn first. GM's cash on hand, money used to fund daily operations, will be about gone in late 2009. With GM's current credit ratings, it is doubtful that they will be able to borrow any more money. So, aside from some form of government loan (which I personally am dead set against) or selling assets, the party is over. Market share is equally scary. As the article pointed out, GM's business model at one time was based on a 40% market share. That has since been adjusted down, but with GM's market share falling like clockwork every quarter, how can anyone guess what a reasonable estimate for GM's share actually is? And, if you don't have a clear idea how many vehicles you can expect to sell, how can you configure your business to be profitable at that point? Frankly, I think GM should figure around 15%. Delphi. This is a killer. Delphi as you know was GM's internal parts making operation, spun off in 1999. Since GM sold them off, Delphi had not been profitable, and has survived by selling operations. There is not much of Delphi left, but what is left is vitally important to GM, as Delphi is still GM's #1 supplier. Delphi has been in backruptcy since late 2005, and the finance scheme to allow Delphi to exit backruptcy has fallen apart. About the only thing left to do is for Delphi to go into recievership, and for GM to pick up the operations it needs to continue operations. That of course represents a massive financial headache for GM at a time they can least afford it. But, the real question regarding Delphi is one no one wants to talk about: How did they get into this mess in the first place? To hear GM tell the story, Delphi was not able to grow their business outside of GM, and in order to keep Delphi going, GM actually pays a premium for the parts it buys from Delphi. Delphi's story is equally interesting, they got in this mess because GM isn't able to pay Delphi far market prices for the parts they buy, and Delphi looses money on GM business. I think I might be more willing to believe the latter, because Delphi supposedly makes a lot of money overseas selling parts to foreign automakers. In the face of all this doom and gloom, GM says they have a plan. A car called the Volt. Could be a real game changer, a 'real' car that for most people would function like a straight electric car, but can easily be driven long distances like a conventional car. While many people on these boards argue back and forth about Lutz, Zeta, Kappa, should Pontiac bring back the Firebird, diesel Suburbans, and Hummers, if you take a step back you can see that GM could care less about all of that, and is putting ALL their efforts into the Volt. It is GM's only hope. Or is it? Some are saying under their breath that the Volt is not going to be profitable for a number of years, and that even if it becomes the runaway success GM is counting on, GM may not be able to produce more than a couple of hundred thousand a year. If that is true, what is GM's real hope of survival? It is that gasoline will get very inexpensive again, and GM will be able to sell large numbers of somewhat outdated full size SUV's for long enough that they can get back to profitablility. If you feel like betting on this long shot, GM shares are trading around $10...... Good luck.