Is GM’s decision to file for chapter 11 what the company needed for a reboot and restart? Although it’s hard to tell at this point, optimists are confident.
It may take couple years before the government can start unwinding their stakes, but they believe this could be exactly what the company is looking for. The bankruptcy process will able GM to start on a fresh slate and so shifting it’s manufacturing from big fuel guzzling SUVs to fuel efficient smart cars.
There are two ways GM can go about this.
Be an innovative chic yet eco-friendly car company that competes with its luxury competitors like BMW and Mercedes-Benz or be another average priced hybrid that just can't seem to find a target market niche.
With no expectations to uphold, GM will now be able to start on a blank slate and since the pressure of maintaining the company’s name and value have diminished, all transactions are renegotiable. This means, now they are able to renegotiate terms with suppliers as well as the dealers and maintain a right size network to manage.
The shift will be evident. No more big, vast and commercial – smaller, sleeker and cheaper will be GM’s new motto. Smaller cars, smaller plants, cheaper parts, cheaper cars, sleeker models.
Of course, not all of them are agreeing with the fast track restructuring of the company that President Obama desires. The Republicans dubbed GM “Government Motors” and believe it is still too early to meddle with unstable foundations.
“It’s inevitable it will be messy”, Louis Lataif, a former Ford Motor Corp executives said. So is our government really able to run a private business? The progress remains to be watched.
Former U.S. labor secretary Robert Reich believes "It would be too much of a blow to the nation and the consumer psyche to have the icon General Motors basically disappear."
Amidst this turmoil, will GM be able to resurrect from its ashes, or will it be another American auto giant that simply disappears from our NYSE.
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CNBC.com with wires