Treasury Department Instructs GM To Prepare For Bankruptcy

This is not a good situation for anyone, but it's a necessary one.

If GM's brass decided to build decent cars 10 years ago we would not be in this situation. Classic example of a Bad business model detroying a company and sending 100,000's of employees to the unemployment line. Sad!

That logic would only work if GM wasn't selling millions of cars. The problem is that the company isn't really making money on the cars they do sell. Blame what ever you want for that. My personal favorite is the unions having all the employee's make $73 an hour after benefits... including janitors and such since the unions don't allow GM to farm those jobs out.

I thought that the main reason for this problem was that people are not buying cars. More so, they are not buying American cars. Now you're saying that sales isn't the issue, but the issue is profitability? I disagree. Just because GM are selling millions of cars that doesn’t mean that they are meeting their sales goals? Are you saying that there isn’t anything wrong with GM’s current lineup?

And even if they are not making any profit from their vehicles it’s because the vehicles themselves are not profitable. They are not profitable because no one wants a substandard product (or a big Hulking SUV anymore). How can GM make those cars more profitable? Raise the price? They simply have to sell more. It still all boils down to GM (for the most part) not being able to build desirable cars IMO. Instead they stuck to the SUVs and gas guzzlers, when Toyota/Honda/Nissan (the competition) were building efficient, reliable economically, conscious cars.

So what you are telling me is that if you sell more product at a loss... you will make up for it in numbers? I am sorry, but that math is horrible.

"So what you are telling me is that if you sell more product at a loss... you will make up for it in numbers? I am sorry, but that math is horrible"

- I never said that. Who said anything about GM selling the vehicles at a loss? Not me. Stop putting words in my mouth.

You said that GM's problems are not because of sales. Which sounds a little crazy imo.

Your exact quote was "The problem is that the company isn't really making money on the cars they do sell."

Why aren't they making any money on the cars that they do sell? Is it because GM had to lower prices? If that is the case, then the reason they had to lower the price of the vehicles in the first place was because no one was buying them at the prices that they were introduced at.

Just curios, why do you think that they are not making any money on the "millions" of cars that they do sell? Please enlighten

LexSucks,

The single biggest problem facing the entire auto industry is that cars do not really reflect their true value. The fact that I can get a very slightly used Chevy Cobalt for something like $12,000 is nuts. When you factor in all the costs, the margins on vehicles are very small and volumes have to be exceedingly large to make a profit to overcome development costs.


I really hate the idiots in the media who keep saying things like "GM looses $2500 per car", or "GM spends $73/hr on UAW labor". These numbers and blurps don't show anything near the reality of the industry.

For example, if GM sold 25 Tahoes a year, they'd be selling at a loss of about $5,000,000 per vehicle. When GM sells 200,000, they make a profit per vehicle based on GM's fixed costs, must of which is due to meeting government regulations.

By the way, I'm not trying to be condescending to anyone. Just had to put that out there.

I believe it is pretty simple, over paid workers, and having 1 in 4 people that they are supporting actually working for them. Whoever thought it was a good idea to have a company pay compensation for firing their employees do to being replaced by a machine must have been a union baby. That makes progressing to create even more reliable products extremely expensive... now here come people such as yourself saying that GM is losing money because they produce shitty products... Unions used to be a necessity during the industrial revolution. Now with such an international market place they are useless, companies should be competing for the best employees and offering incentives to their workers, and not falling prey to corporate communism.

Dear GM, you have had 4 months under Government financing and we have seen no major restructuring effort, no brands dissolved and no real progress. What efforts have been made to right size and become more competitive. This 4 month crunch has really shown us that you are too big and unwieldy to move quickly and react to market conditions effectively. I have been a domestic advocate and championed the Government loans but they seem to have little to no effect on your business practices. There may be planning, but there has been no action. This is and has been your challenge for the past number of years. See you under bankruptcy protection.

This is gonna hurt but only for a little while.

Now THERE was a great use of our funds!

They KNEW this would happen BEFORE they gave them the bailout money.

WHAT a waste.

Stupidity 1 Obama Admin 0

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Please, you can't honestly believe that it would have been better to let GM/Ford/Chrysler go into a dizzy-tailspin last November.. get over it.

It would have tossed the whole world into a massive depression.

At least this way, as much as I don't support Ch11 for GM, there is a structure in place to hopefully get GM back up on its feet (away from the evil claws of the government). America without GM might as well just pack it in, call in a session of the U.N. and say that we are no longer a superpower.

Whats the biggest shame is that it is our government that put GM in the place that it is in today. Has no one realized the biggest 800,000,000 lbs gorilla in the room is the fact that the government's criminal/stupid moves to deregulate energy/finance over the past 15 years has caused the disaster we are in today?

Stupid short-sighted actions on the part of nearly all American people/companies got us in the place that we are today... so our solution is to make another short-sighted decision and risk losing one of the most important companies just to satisfy a group of vocal naysayers.

This whole GM nonsense only has 1 winner, the asian competition. Glad to see that so many Americans are so anti-GM, hope all the naysayers get whats coming to them when their standards of living decrease.

Also, are you implying that the Obama admin is "smart". From your setup, it looks like stupidity is competing with Obama.

Sorry, the depression scare was PURE media hype.

Things aren't good but nowhere near as bad as the media says.

Obama is a politician just like Bush. They got their payback at our expense.

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In any event, GM has got to get out of this mess that it's in. Hopefully they can get this crap figured out soon and get back to normal. They really have been making massive strides the past few years and it would be a shame to see all that hard work and effort go to waste.

Wouldnt hurt if a car scrappage law were passed.... minus the typical eco-whacko mileage stipulations.

Right now isn't the time for nonsense special interests, get vehicles sold, congress needs to get the whole fuel economy thing out of their minds for a little while. I'd rather GM sold an extra 100,000 tahoes instead of 100,000 cobalts.

and just WHERE do you expect to find 100,000 suckers who'd buy tahoes instead of cobalts when they're not even sure if they'll have a job next month?

Bankruptcy will force GM to make the financial decisions that it needs to make but either can not or will not make on their own.

My biggest problem with the entire deal is that the Obama Admin is treating the financial companies differently than the auto companies. If they are going to force GM into bankruptcy than they should force a few large financial companies into the same position.

Let's not forget.........Obama himself said 'CHANGE IS COMING'!! Some of us obviously didn't stop to think about exactly what that meant. Like the old adage says "be careful what you wish for cause you just might get it"! :)

good points!

yes, ford has had to meet the same gov't regs, but they aren't hurting so much.

there's an article that explained "How Detroit went from being Kings of the the Road to Roadkill" by a sr. WSJ editor. GM made not one, but a whole series of assumptions regarding the asian brands and how to respond. ALL WRONG. (google the title, you'll find the article.)

any wonder they're in the fix they are in?

and while paying janitors $70/hr with benefits ain't a good biz model, what about overpaid execs? plus typical of the corrupt u.s. corporate culture, the idiots who made all those mistakes often got BONUSES for their mismanagement.

All you people who condemn GM. Are you going to support them after bankruptsy and restructuring or keep shooting your mouths of and sending your money to Asia?

GM had so many chances of redeeming themselves to be a better productive Company. Our dear old Government are the idiots that keep giving them funds and yet GM still haven't been given any solid implementation to prove that it could survive the losses.

I would gladly say that its time for GM to be buried 6 feet deep.