Wichita Business Daily

What is the future of General Motors?

As we all know the worlds largest automotive company General Motors sales has come down and it is using up all its reserves to survive till the year end. It has taken every step to reduce the expenditure and it is still struggling to survive.

Public Comments

1. They hv incurred huge losses & are trying to salvage. But things seems to be very bad. they may even go bust!
2. GM has created an Electric vehicle, which will come out as a 2010 model, as required by the union agreement made while the union was on strike last year. http://www.chevrolet.com/electriccar/ GM has great and innovative products to come! However, with this economic downturn, many people may be buying vehicles second hand instead. A one-time payment of $800 for an old 1989 Honda Civic at looks a lot better than getting locked in a 5 year loan with monthly payments and "full coverage" insurance. I personally believe GM will be saved (either on its own or by the government.) Ford on the other hand doesn't have an electric vehicle and also doesn't give company dividends--like GM does--which makes Ford a less attractive investment. The future of GM is uncertain, but I feel it's near the bottom ($2/share may be the bottom) but it may also be a great investment if you're a "bottom fisher." Buy low, sell high.. it's a basic concept which works but the market is too volatile to know for sure if GM will pull through.
3. 1 Reason: Greed and arrogance finally caused it's downfall. First of all, GM did not listen when there was a demand for more fuel efficient vehicles. They kept tooling their production and assembly lines for high fuel vehicles, because they felt it would make money. Their design process for retooling vehicles is extensive, thanks to TS:16949. Secondly, the automotive industry looks at direct dollars saved, rather than indirect. I A third area is the high level of benefits and wages that both management and the UAW have enjoyed, as well as the guarantee that a union employee would get up to 95% of their wages paid in supplement when they are laid off. While it makes a good life for the workers, those expenditures have created a huge labor cost, and the board of directors fought back this year by introducing wage concessions to the workers. All of these factors go into the costs of the vehicles. When times are tough, people are not going to spend $15-50K on a new vehicle. So, Goliath is going to have to learn from their mistakes and it will be costly.
4. There isn't much of a future right now for GM unless government bails them out. Basically they got 6 month death sentence without bailout - they are burning through about $11 billion every quarter when their entire cash reserve is only $16.2 billion. So... unless Bush or Obama administration gives out at least $20 billion by the next year, you may see the biggest automaker company crumbling to the death. By the way, Ford isn't very safe either, as it's burning up $7.7 billion each quarter.