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After five months and $19.4 Billion in federal aid, three restructuring plans, and the removal of one CEO, General Motors is locked, loaded, and ready to file for Chapter 11 Bankruptcy protection on Monday.
It's never a wise thing to predict a smooth bankruptcy. Especially when you you are dealing with a company as large, as complex, and as loaded down with debt as General Motors.
Remember the first time you went into a dealership to buy a new car because you truly felt you could afford a new car loan? Remember the sticker shock when you ran the numbers and said to yourself, "I didn't really think it would that much." Now you know how many people feel when they see it might take $50 Billion to fix GM.
This is the day current and retired UAW members at General Motors have been fearing. In stark terms union members are finding out just how much their benefits, their jobs, and what they've come to expect will be changing as GM restructures either in or out of bankruptcy.
This week GM and Chrysler will transform the auto industry by skidding into and through bankruptcy. If they can avoid a major car wreck, perhaps Uncle Sam's "controlled bankruptcy" plan will work.
Four months into President Obama's administration and three months after he created the Auto Task Force to find a solution for an imploding auto industry, people are mad at the President.
Within two weeks expect to see GM in bankruptcy. And when the company files, whether it's late next week or Monday June 1st, the road map for a quick creation of a newer, leaner GM will be laid out for the Federal Government to follow. It's the Chrysler bankruptcy which has gone about as smoothly as the auto task force was hoping.
How do you define "free market". Yesterday, I argued the "free market" should determine if cars and trucks are powered by diesel fuel or by the conventional gasoline most vehicles currently use. This baffled some of you.
Over the last two days, as I've blogged about new fuel efficiency rules President Obama laid out at the White House, I've been struck by the opposition to these changes.
With the new mandate from Washington, this efficiency movement in the auto industry will pick up momentum, and several companies are positioned to profit.
For years, we've heard Detroit and other auto makers lobby against higher fuel economy standards because it would drive up costs and ultimately hurt sales of SUV's and pick-ups- vehicles Americans want.
"UNCLE!!!!!!!!!" That's the cry you'll hear from Detroit to Washington as President Barack Obama announces a new tailpipe emission standard that mirrors the tough measures California has been trying to impose for years.
Ask yourself these questions: If you are looking for a new car, truck, or minivan right now, will you buy a Chrysler, Dodge, or Jeep? Will you seriously consider one of those models?
For decades, they've been the backbone of auto sales in the U.S. The smaller independent dealer is what most of America grew up with. Now those smaller dealers are about to dwindle in number and influence.
They are in the crosshairs of the auto task and passionate about their feelings over GM and Chrysler plans to drop dealers. What's interesting is that not all dealers are against the idea of trimming the dealer ranks, while others are fearing the end of business' that have been in their family for years.
For auto dealers, this may go down as the worst week ever. GM will announce plans to cut 2600 dealerships while Chrysler drops roughly 850. That's roughly 42% of the GM dealerships and 27% of the Chrysler stores going away.
It's kind of like watching a car crash. You know it's sad. You know it's awful. But you can't stop looking at it. I'm not trying to be trivial about the plunge in GM shares this week.
For months we've all heard the warnings. If GM and Chrysler go bankrupt it will trigger a host of other bankruptcies from suppliers to dealers.
The fact Toyota posted it's first annual loss in 75 years is not surprising- almost every auto maker lost money this year. The fact this company lost $6.9 Billion in the quarter ending this March is staggering, but not so out of line that people are shocked. What is surprising is Toyota CEO Katsuaki Watanabe telling reporters in Tokyo his company was "lacking in the scope and speed of dealing with various issues."
When you burn through $113 Million every day, it seems ludicrous to say that the quarter turned out a little better than expected. Equally disturbing is the fact few will seem phased by the fact spent $113 Million more than it took in every single day of the first quarter.