GM to File Bankruptcy Again? Probably.

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posted on Aug, 23 2012 @ 09:37 PM
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I haven't seen this posted anywhere so if this is a repeat, please delete it. I am taking quotes from the article and condensing them to simply drive the point home without you having to read the entire article.


President Obama is proud of his bailout of General Motors. That’s good, because, if he wins a second term, he is probably going to have to bail GM out again.


First, I'll lay out some facts:

* The US Government holds about 26% of GM stock, 500,000,000 shares.
* It would need to get about $53.00/share for these to break even on the bailout. It close at $21.31 today
* When GM reorganized and went public, after the bailout, it opened at $33/share
Since the bailout, the Dow has risen about 20%, so based on these numbers, relative to the Dow, GM has lost around 46% of it's value since the bail out. Obama-nomics. Remember, he's proud of this bail-out.

Other pertinent facts:

1) "D" class automobiles are have the largest market share, comprising about 21% of the US market so far this year. These are mid-sized family cars which include the Impala, Nissan Altima, Toyota Camry, etc. For many auto makers, this segment is their "bread and butter". (The D-Segment is the highest volume single vehicle class in the U.S.)

2) Typically, a car company takes about 5 years to completely re-design an automobile. This is where things get interesting. Common sense tells us, if you don't get it right, you are pretty much screwed for the next 5 years, (my own analysis). You are stuck with a sub-par product for your #1 market. Not good.

3) GM is in the process of introducing a totally redesigned 2013 Chevy Impala.


Automobile technology is progressing so fast that the best vehicle in a given segment is usually just the newest design in that segment. Accordingly, if a car company comes out with a new, completely redesigned vehicle, it had better be superior to the older models being offered by its competitors. If it is not, the company will spend the next five years (the usual time between major redesigns in this segment) losing market share and/or offering costly “incentives” to “move the metal”.


In short, in the March 2012 issue of Car and Driver, the Impala was beat by considerable margins by the Volkswagen Passat and the Honda Accord (a 5 year-old design!).

Furthermore, even though it has a hybrid powertrain, it's even in gas mileage with the other contenders and actually slightly worse than the 2013 Altima.

They shortened the wheelbase from the previous model, (evidently a big no-no if you want to maintain that "big-car" feel and sparse leg room in the back seat, where, as they put it in the article, "just like baseball, is a game of inches"). In addition, the hybrid design took away from precious trunk space.

In short, GM completely blew it. They will now be forced to push these things out the door for the next 5 years, offering loss-leading incentives and "sub prime" auto loans just to dump them.

In my opinion, the whole hybrid idea probably came from the Obama administration. They are so bent on their clean initiative that it completely overshadowed any business sense. I can't prove that they had a say in it, but knowing how militant they are and how determined they are to shove their "green" garbage down everybody's throat, it's difficult to believe that there weren't some subtle "hints" dropped down the line. Remember, 26% is a huge share, then throw in the monstrosity that is Obama's ego as well as the rest of this dictatorial administration and it just makes sense.

A few other noteworthy quotes:


Akerson (GM's CEO) got his first job in the automobile industry when he was named CEO of GM in late 2010. Recently, he has been hiring and firing top GM executives at an alarming pace, and he is understood to be working on a major reorganization of the company. Akerson recently gave a televised speech to GM employees on the need for “integrity”.



Uh-oh. While Dan Akerson is busy rearranging the deck chairs on GM’s Titanic, Martin Winterkorn is leading VW to world domination via technical excellence.


Link to Source
edit on 23-8-2012 by axslinger because: Replaced "Malibu" with "Impala"
edit on 23-8-2012 by axslinger because: (no reason given)




posted on Aug, 23 2012 @ 09:48 PM
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reply to post by axslinger
 


GM needs to get back to their roots and start making appealing and effective cars. Gm's success came from simple, cost effective and reliable. Americans want cheap and reliable, look how well the astro and s10 did.

If they survive, which they probably won't, its because they suck and deserve to go out of business. Capitalism baby!

Nice thread S&F

And by appealing, I'm not talking about looks, GM has no clue what drives Americans to buy a vehicle.


edit on 23-8-2012 by sicksonezer0 because: (no reason given)



posted on Aug, 23 2012 @ 09:50 PM
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let them go bankrupt



posted on Aug, 23 2012 @ 10:06 PM
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"simple" and "automobile"
do not belong in the same sentence anymore.
i doubt we will see a simple automobile
ever again.



posted on Aug, 23 2012 @ 10:43 PM
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I think the other story here is how Obama touts this bail-out as a "success". Honestly, when it comes to business, Obama would know a success if it bit him in the @ss.

I also think this speaks volumes to what is really wrong with the U.S. in general, but specifically, as a voting base. See, nobody on the left will hear about this and they won't bother to research it. They heard Obama say how good GM was doing and they will take that as fact.

A couple months ago I was at the gym and on the crawl at the bottom of the TV it said, "GM thriving since bailout". The knee-jerk reaction is to say, "oh, that's great! The bail out is working!", but my mind is more critical than that and perhaps I'm a bit cynical. My thought was, "GM is partly owned by the government, I really don't care how much money they're making because until they re-open the Buick, Saturn, Pontiac and Hummer plants and put those thousands of people back to work, the bailout is a failure!"

Seriously, at the end of the day, how does it affect you and me whether or not GM is "thriving"? Don't get me wrong, I don't want to give them another red cent. Let them fail; but short of putting all of those people back to work, there is nothing GM could do to redeem itself. The net effect on the US people is the number of jobs lost, not how much money the C-suite put in their pockets.

I also love the hypocrisy of the Obama administration. Mitt Romney buys a company then trims a little fat to keep it profitable and he's made out to be the devil himself, but Obama bails out GM, closes dozens of plants and puts thousands out of work to keep it solvent and he's somehow a savior. What I don't get is why Romney doesn't throw that in his face. He could shut that down for Obama with one sentence. The government has never taken over and run a business or industry profitably and it's not going to start with GM. GM is an albatross and will never be viewed the same way again. They're damaged goods. I would never buy a GM unless it was used and even then, it wouldn't be my first choice. I refuse to line the pockets of our government and contribute to their cause.



posted on Aug, 23 2012 @ 11:20 PM
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Obama did not bail out GM he bailed out the unions. GM, Ford and Chrysler are destined to fail as long as they are paying over inflated union wages. Have you went to a dealership and looked at the stickers wow. I guess I will have to settle for used. Bummer huh!



posted on Aug, 23 2012 @ 11:36 PM
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reply to post by Mad dog
 


Obummer! Let GM, the Unions, and Mr. Obama Fail.



posted on Aug, 25 2012 @ 11:37 AM
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reply to post by sicksonezer0
 


agreed

forcing a richer market on a poorer consumer is bad Obamanomics for sure



posted on Aug, 25 2012 @ 02:33 PM
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Until GM fixes their cheaply made arm rests and window hand cranks I really do see them going bankrupt again. Want to save your business GM? Fix the arm rests and window cranks, and your customers will come in droves!



posted on Aug, 25 2012 @ 03:08 PM
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Originally posted by bjax9er
let them go bankrupt


Agreed...I owned a Chevy blazer and had nothing but problems with that POS. Now I own a Honda and couldnt be happier.
edit on 25-8-2012 by solarstorm because: (no reason given)



posted on Aug, 25 2012 @ 04:19 PM
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Deny Ignorance? ? Lol. This site needs a new slogan.


I'm a bleed blue Ford Guy, nobody dislikes GM more than me. However those that wish them to fail undoubtly have no idea what would happen to their friends and families futures if that happens.

Thousands of supplier factories would close, you might not realize it but there's a good chance someone you care about has a job related in some way to the auto industry.



posted on Aug, 25 2012 @ 10:21 PM
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i work at a ford dealership..parts dept. Ford is struggling to keep certain parts coming in..suppliers in the U.S. are going t.u. all over.
we buy quite a few G.M. parts for our used vehicles..they are with few exceptions ALL made in china..
i have seen a few ford parts stamped made in china as well. not many yet though.
not a good sign.



posted on Aug, 26 2012 @ 12:17 AM
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While I won't say G.M. was never the problem, I've always believed it was GMAC that actually got bailed out.



posted on Aug, 26 2012 @ 08:01 AM
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Throwing money at a money-losing operation will always result in it continuing to lose money, period. Companies fail for many reasons, the majority of which are of their own making. In auto-makers' case, it's producing substandard products at non-competitive prices. I've always been a GM person when it comes to autos, but I can't stand the newer ones. They're over-engineered, over-priced and an ordeal to repair (I usually do all my own auto service) whereas my '94 Silverado is still running strong, as is my friend's '94 Sierra and '88 Jimmy.

They don't make'm like they used to, and it's showing in their sales. There's a reason all the imports are selling strong: they're better vehicles, on average! They get better mileage, better aftermarket sale prices and if well-maintained can operate efficiently for hundreds of thousands of kilometers longer than their American-designed counterparts.

Bailing out the auto companies was a mistake because it failed to address the reasons they failed to begin with. Instead of producing the affordable and dependable vehicles people need, they build and sell what they expect their customers to buy: big expensive vehicles with poor mileage and high maintenance costs.

I'm going to keep my old truck running as long as possible because when it comes time for me to replace it, it's not going to be with a newer GM. Or Ford. Or Dodge. Not unless they start making vehicles with emphasis of quality over quantity.

But that has just as much chance of happening as they do becoming a profitable business again.



posted on Aug, 27 2012 @ 04:24 AM
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Ron Paul has said it.

Peter Schiff has said it.

Jim Rogers has said it.

Marc Faber has said it.

These companies, like governments, must be allowed to fail, reorganize and start over.

Liquidate the bad debt".

Stop trying to prop up a failed system, it doesnt work.

Just ask Europe.



posted on Aug, 28 2012 @ 04:18 PM
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The problem with "letting them fail" to the point of dissolution is that if such an event occurs what are the social rammifications? Thousands of secondary and tertiary jobs will then disappear. Mass unemployment. Tax income gone along with all those jobs.

When the masses are unemployed, where they going to go/look to do? Looking for elected officials heads on platters, both parties, is what/where.

As a gov't you gotta spend $ to save everything at times.

We'd be smarter to gut the military budget than let the auto makers fail.

Derek



posted on Aug, 28 2012 @ 04:54 PM
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You need to stop looking at profit/loss on GM shares (in the long term, they will likely go back up) and start looking at the millions of jobs and small businesses that were saved with this bailout, and the cost that the US economy would have taken had the bailout not gone ahead.

Even if the Gov't loses billions on the bailout, it's a pitance compared to what would have been paid out in unemployment benefits and the lost tax revenue from those employees and companies.



posted on Aug, 28 2012 @ 04:55 PM
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THERE IS A REASON they are going bankrupt..

They make, what?, 10000 cars a day. People are only buying 1500 a day.



posted on Aug, 28 2012 @ 05:04 PM
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If Romney gets elected, we can probably say goodbye to Fannie Mae, Freddie Mac, AIG, Citi Group, Bank of America, GM, Chrysler and any other company on the brink if there is another big financial collapse.





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