Is The Worst Yet To Come For GM?

[steinravnik]

Originally Posted by HotCarNut

I think things are going to get a lot worse in a hurry. GM doesn't have a small car coming out until 2010 when the Cruze, Groove/Trax, and Volt (albeit in very small numbers) appear. Given the demographic shifts that have occurred, and GM's cash bleed, I'm not sure they can survive another 20-24 months waiting for these models. For GM to have any chance, the Cruze needs to come out in the US at the same time as Europe - Spring 2009. Of all of the vehicles on the drawing board, that one has the best chance to "move the needle" for GM as Bob Lutz likes to say. In the meantime, focus your advertising dollars on the Saturn lineup, the Pontiac Vibe and G5, the Malibu, Cobalt, and Aveo, and forget about advertising trucks. It's pretty much GM's only hope to survive until 2010 when the new UAW concessions kick in, the other new small cars arrive, and the Volt comes online.

The Cobalt is not that bad. Can't they give it a decent interior and update the outside? Surely they can rush something like that through like they did the SUVs.

[I-Love-Pontiac]

I don't understand what they can do to stay in business. With gas prices the way they are SUVs are done with. And SUVs are WAY more profitable than cars.

Everyone is saying "oh they just need to make better more fuel efficient cars". Well I'm sorry but that's not going to do it. First of all when GM makes a good car it doesn't sell (well enough), and what's even worse GM doesn't make money on small cars. They make something like $500 on a Cobalt. On a Tahoe I would image it's closer to $5,000. So just think about that. For every Tahoe sale they lose they need to sell 10 Cobalts to compensate. Which obviously is not going to happen.

I mean even with all the tremendously profitable SUV sales, and something like 60% of the full size SUV market, they still weren't making enough money to keep GM profitable. So how in the hell are they going to make it without SUVs? I feel like they need to reinvent the car. They need to make the car the people didn't know they wanted. In the 50s it was glamour cars, then muscle cars, then suvs, now it's hybrids... which don't actually make any money. So what's next? They need something that people are willing to spend a lot of money on even if it doesn't cost a lot to make.

I feel like they should be looking into something like this... A sort of fashionable ultra high efficiency car. Even if it's not anywhere near that big.



or look into something like this again...

[windvale]

Oh, don't worry...it's going to get a hell of a lot worse.

The Volt, Cruz and a mini-car should help, but there's no new products coming to GM NA before 2010 that help the situation - so why should things get any better ?

I'd say it's 50/50 for chapter 11 by 2010. Don't believe it ? What's going to happen between now and then that will prevent it...other that announcements of more cuts and turnaround plans ?

[Buickman]

notice a trend? RIR should have been shown the door some time ago, now he deserves the window!

[stormwatcher]

I predict GM's reported loss tomorrow will be in the $8 to $12 billion range.

GM will put all the costs for the announced plant closings, early retirements, lease losses, etc, into this quarter to get as much bad news out of the way as possible.

[Tstag]

Originally Posted by windvale

Oh, don't worry...it's going to get a hell of a lot worse.

The Volt, Cruz and a mini-car should help, but there's no new products coming to GM NA before 2010 that help the situation - so why should things get any better ?

I'd say it's 50/50 for chapter 11 by 2010. Don't believe it ? What's going to happen between now and then that will prevent it...other that announcements of more cuts and turnaround plans ?

Won't the Volt lose money?

[A.J.]

IMO, I think it's a toss-up if the worst is yet to come.

The worst has already came - The incredible shift from SUVs to small cars has already happened. Most people who decided to keep their SUVs during the shift will still buy them - no matter how much gas prices go up.

The worst hasn't come yet - With production dropping and people losing their jobs, GM is probably going to lose a nice wad of cash. Losing cash doesn't help in the long run.

Oh, by the way, gas prices have gone down in my area - three weeks ago it was $3.99-$4.09 a gallon, now it's $3.79 a gallon all around.

[tgagneguam]

Originally Posted by dindak

...GM needs the economy to improve (as do all the car makers) and need to make the best use of capital to continue to build on recent success like the Malibu and CTS. The American public also needs to give GM another look! Costs also need to keep coming down.

Naw, there are other companies that are doing just fine, despite the challenging economy, despite fuel regulations, despite high gasoline prices, despite a whole variety of challenges. If GM pins its hopes on improvement on mostly external factors to see a significant improvement in its own position, then GM truly is in for worse days.

I pray that that's not their competitive mindset.

[KingElvis]

[quote=Rick_VT;1471170]

Originally Posted by JVal14

I think there's a good chance things could get worse. Smaller cars are in much higher demand now, and probably will be for many years to come. GM has never been able to figure out how to mke solid profit off of small cars, and I doubt they suddenly will soon. Also, the ability to globalize is of top imortance for such a large company, and they've only been partially successful in that regard. Lastly, their cash crunch is brutal, and not even because they can burn through cash fast, but because it will be painfully difficult for them to raise more cash: their credit rating is aweful, the credit crunch is in full effect, and they're forced into selling assets at an unfavorable time.

The cash burn is definately there biggest problem, it would be great to see some figures to see where GM is spending most of its money so we can all get a better idea on why they lose so much.

As far as the small car problem goes, GM never sold many small cars in the past so they were never really able to amortise costs effectively with large numbers of sales, plus all the legacy costs inbuilt to there cars, my mind still spins at the job bank, but with smaller cars now selling in larger numbers and with all the platform sharing around the world of these smaller platforms GM has a much better chance to make a profit with small cars, especially now much of the legacy costs will be gone soon.

Wrong. The Chevette was a best selling GM car for years.

I will agree GM just hasn't profited from small cars. In fact, when the CHevette was king of the sales charts, it's duty in life was to average out the CAFE numbers so profitable big cars and trucks could be sold.

[johnnyl321]

Next thing that GM will start cutting is the retirees pensions. Won't be long before the old folks start having to pay more and more for their healthcare they were promised and their pension checks start getting lighter and lighter. What are they going to do??? Sue a bankrupt company?

[fp115]

Originally Posted by 2002 Caddy

Someone said exactly that at 29% market share, $20 a share and we still paid a dividend...

"The worst is behind us" probably won't happen until 2010/11

Exactly, most of the cuts won't take affect till 2010, while some kicking in at 2009 and others at 2011. It will be very bumpy till then, but GM must keep a close eye on everything until then, to that point the company must still continue to change to pursue into the future.

[gaffo]

Originally Posted by HotCarNut

Cruze won't save GM, but it's the only new small car that GM has coming out that can make a real impact. The Beat/Groove/Trax production car will be a niche product. The Cobalt isn't perceived well, and doesn't sell at the same kind of margins that Honda enjoys with the Civic or Toyota with the Corolla. My hope is that GM knocks the Cruze out of the park on both the manufacturing and customer sides of the fence. Then it will generate profit instead of being a break-even vehicle.

I love how all of the sudden the Beat/Groove/ Trax is a so called "niche product" since GM as decided to no offer them to the U.S.

Mark my words, the Beat will sell very well in Europe. Times are a changing, and Americans will soon want a car of eat size - they will look around and see GM don't have one and go over to one of the Import makers and buy that car that GM had the wisdom of never intending to offer in the States.

Oh ya, the Trax and Groove are NOT going to be offered in the States - and SUPERSIZED version of them will be offered instead.

Don't equate the real ones that we will never see with the glutonous ones we end up getting.

Ford would be wise to offer the Ka - more so than the Fiesta. Especially since today's Ka is the same size as yesterdays Fiesta.

People buy cheap cars in a crap economy - Ka would outsell the Fiesta.

But Ford is a dump as GM - so they will not offer the Ka.

once again the field will be wide open for Toyohonda to take the field and make $$$, while GM-ford pouts and cries like babies.

[doh]

Originally Posted by Tstag

Won't the Volt lose money?

Like all small cars that came before the Volt. GM is in trouble and triple didgit Oil just pounded the last nail in the coffin.

Even 10+ years ago, GM said they lost $$$ on every J Car they sold, it will be tough to make $$$ on them today.

[fp115]

Originally Posted by doh

Like all small cars that came before the Volt. GM is in trouble and triple didgit Oil just pounded the last nail in the coffin.

Even 10+ years ago, GM said they lost $$$ on every J Car they sold, it will be tough to make $$$ on them today.

The Prius loses money, whats your point? Its only an image thing.

[doh]

Originally Posted by fp115

The Prius loses money, whats your point? Its only an image thing.

Toyo can afford to loose money for image, GM cannot.

GM needs a profitable "Hit" in the fuel effiencent small car catagory