It looks like you're using an Ad Blocker.
Please white-list or disable AboveTopSecret.com in your ad-blocking tool.
Some features of ATS will be disabled while you continue to use an ad-blocker.
GM plunges 31% as outlook dims
After dropping sharply early in the day, GM (GM, Fortune 500) shares hit their lowest point since 1950, closing down 31% to $4.76 a share. Ford (F, Fortune 500) fell nearly 22% to $2.08.
GM said in a statement Friday that bankruptcy protection was "not an option."
But the stock plunge effectively puts both companies on death watch, and it's easy to see why. The ratings warnings followed a new report by Global Insight that shows U.S. auto sales hitting recession levels this year - and then sinking lower in 2009.
It turns out that auto finance companies were as guilty as mortgage lenders in providing loans to subprime borrowers - and their generosity is coming back to haunt them. Lenders dramatically cut standards for credit worthiness at the beginning of 2008 and now delinquency rates have been shooting up to levels not seen in 30 years.
G.M. and Chrysler Explore Merger
General Motors is in preliminary talks about a possible merger with Chrysler, a deal that could drastically remake the landscape of the auto industry by reducing the Big Three of Detroit automakers to the Big Two.
The auto industry is being pummeled from all sides — by high gas prices that have soured consumers on profitable S.U.V.’s, by a softening economy that has scared shoppers away from showrooms, and by tight credit that is making it difficult for willing buyers to obtain loans. Both G.M. and Chrysler have been struggling with product lineups that are out of sync with consumer demand for smaller, more fuel-efficient cars.
General Motors’ stock has fallen from more than $43 a share last year to less than $5, and it is burning through its cash hoard at a rapid rate. Chrysler, as a private company, no longer needs to report its finances.
GM Said to Seek Merger With Ford Before Chrysler
Before General Motors began exploring a possible merger with Chrysler — talks that first came to light on Friday — G. M. proposed a similar deal with its other cross-town rival, the Ford Motor Company, two people with knowledge of the talks said Saturday.
The behind-the-scenes maneuvering illustrates the mounting pressure on the Big Three Detroit automakers to solve their enormous financial problems and stave off bankruptcy.
Both G. M. and Chrysler are losing market share in the United States and burning through billions of dollars in cash while they scramble to revamp their unprofitable North American operations. But they may be running out of time. With auto sales at their lowest level in 15 years, both companies face the possibility of bankruptcy before their turnaround efforts take hold.
Analysts: GM would need cash to acquire Chrysler
For General Motors Corp. to acquire Chrysler LLC and all of its warts, GM would have to get desperately needed cash as part of the deal. Lots of it, according to industry analysts.
With both automakers struggling to survive amid slumping sales, a slowing global economy and an unprecedented credit crunch, it's unclear whether Chrysler's majority owner, Cerberus Capital Management LP, would be willing to pay up, or whether the federal government might even get involved to save one or both struggling automakers.
... "If you put two auto companies together, both that are losing money, both that are losing market share, you've just got an auto company that's losing market share faster and losing more money."
Originally posted by Gools
Where is a company that big supposed to find financing in this market?!
General Motors Corp. saw its credit default swaps rise to a record after the automaker said Sept. 19 it was going to draw down the remainder of a $4.5 billion revolving credit line to preserve cash because of the instability in the financial markets. Detroit-based GM, the largest U.S. carmaker, has lost almost $70 billion since 2004.
The most interesting thing about GM is the fact that there is $1 trillion in credit default swaps speculating on the demise or lack thereof of this dog. To put things into perspective, the market cap of GM is $9 Billion and over $1 trillion is bet on whether or not it survives. Anyone who tells me these bets are hedged, please tell me how. There is not enough stock or bonds to hedge with. By the way, that $1T figure is over a year old. Anyone with a more current number, please send it my way.
Originally posted by anachryon
Why, Mr. Gools, I do believe you indicated the answer to that question a few days ago!
GM Announces Plant Closures; More Cuts Coming
More downsizing moves are expected from General Motors Corp. (GM) in the weeks and months ahead as the auto maker - burning cash and unable to borrow money - is left with cost cutting as its main tool to pare massive losses.
A Wisconsin truck factory and a Michigan stamping plant on Monday became the latest causalities of GM's race to shrink its operations in the face of slipping U.S. sales, especially in pickup trucks and sport-utility vehicles.
The auto maker said it will close a metal stamping plant near Grand Rapids, Mich. in December 2009. Also, a Janesville, Wisc., SUV plant will close Dec. 23, earlier than planned, the second time in 10 days GM announced accelerated plant closings. Another SUV plant, in Moraine, Ohio, will close Dec. 23.