After divesting itself of every ancillary business from appliances to locomotives to raise operating capital, GM's started throwing the last pieces of furniture onto its cash conflagration. This past July they sold the Allison Transmission unit for $5.6b. Now The Flint Journal tells us they're getting closer to selling off their medium-duty truck line to International. Sales of the medium-duties– sold as the Chevy Kodiak, GMC TopKick and Isuzu T-Series– have been down this year. The United Auto Workers (UAW) will have to approve that sale and VP Cal Rapson says he won't go for it unless GM asks him nicely "it makes sense for Flint and the UAW." In the meantime, UAW workers at International are on strike over the planned layoff of 500 workers, which may complicate things. At the rate they're going, GM's "damaged brands" Pontiac and Buick better watch out — Chinese automakers would line-up cash-in-hand to get access to a ready-made U.S. dealer network.
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As much as I’d hate to see Pontiac or Buick go…I’d have thought the medium duty business a bit more vital. I’d certainly think it’d be better than buying Avtovaz. (doh!)
selling off their medium-duty truck line to International
Do they produce seperate figures that reveal whether or not this unit is profitable?
You know, it occurs to me that the folks at Ren Center may be delusional enough to believe in a grand plan – sell all these pieces off now to return to profitability, then in a few years, when the buyers’ fortunes have changed, go back to the buyers and offer to buy back the sold off divisions, and return GM to its mammoth glory…
But then I realize if they were that far-sighted, and not bottom-line driven, they wouldn’t be in this mess in the first place.
Didn’t GM spend a boat-load of money to put the GMC TopKick in the Transformers movie?
Selling Buick and Pontiac to the Chinese would piss off alost every current owner.
Right you are Blunozer As a lifelong Pontiac man I can’t get my head around an Aussie Grand Prix.
The Chieftan head on a Asian car?How bad can the news get?
This is exceptionally stupid, just as was selling Allison.
You don’t get rid of the profitable parts of your business to raise capital for the parts that are losing money.
TTAC previously blogged about how some domestic dealers were shifting to sell only used cars, because on those they can actually pay the rent and afford food. That, and doing service. That’s sad, but it’s basic economics and for those dealers, was absolutely the right choice.
From a pure business standpoint, perhaps GM should have dumped everything BUT Allison, GMAC, the medium duty trucks, the Corvette.
Isn’t this called liquidating the company?
When I analysis GM current actions I get the impression that they are purposely selling everything that is profitable and worth something BEFORE they declare that they are bankrupt !
This way they can successfully divy out the profits into their golden parachutes befor the creditors can get their hands on anything of value.
Considering that actions or lack of by the Gm’s DOB over the last decade and the indifference of upper management I would not be shocked to see the majority shareholders raid GM and leave everyone else including the the UAW, the dealers out in the cold.
Remember it is the car business that is killing GM today. By the time they finally turn-off the lights the automobile part of GM will be the only thing left to be picked apart and sold at fire sale prices.
Exactly what I was thinking.
Oh, and wouldn’t pissing off every Buick and Pontiac dealer amount to a tempest in a teacup? After all, wait about 20 more years and there might not be anymore Buick customers anyway. As for Pontiac, there has been more excitement in other brands for years now than what little GM is building into that brand.
Given Buick’s success in China, it might make more sense as a Chinese company selling cars in the US than a US company selling cars in China
Does GM have to get some sort of approval from the lenders of the all those bilions of dollars before they sell off parts of their company, I mean what will be left to repo?
So if they do, I mean when they do, go into bankruptcy they will have no choice but to liquidate because all the valuable assets would have already been sold off and only the huge liabilities will be left.
Is Corvette the next up forsale after this?
What’s wrong with you people? We criticize GM incessantly for being a big, stupid, bloated, unfocused bureaucracy, yet I’ve noticed people come out of the woodwork to criticize every move they make to actually change and sharpen their focus. No wonder it’s so hard for bureaucracies to change and reform.
Give a little credit. GM figured out that they can’t be both a bank and a vehicle maker and do both well, so they decided they wanted to be a vehicle maker, and they sold GMAC.
Maybe now they’ve figured out they just want to be good at making passenger cars, instead of trying to make tonka trucks. Considering the immediate blowback from a union only interested in itself and some town that GM customers do not care at all about, I’d say that’s likely a good choice.
Doesn’t matter if the this niche unit is profitable — GM needs to learn how to make light vehicles for consumers, including small cars, well and profitably — or GM WILL die.
Kevin :
The problem with this strategy at GM is that all of this selling of assests is not really helping one bit. GM is burning cash so fast now that these moves are like throwing your food and water out of the lifeboat to save weight.
GM has a big SIMPLE problem with it car business, it is just to big! Too much production and dealer network to support too few GM customers. Selling the medium truck division and Allison Transmission will NOT expand GMs marketshare in passanger cars one iota, nor will it lessen the burden of creating, building, and supporting too many products that can’t find homes (owners).
As a car maker GM is a seriously wounded giant in critial condition. As a comglomorate GM could have been successful. As a car maker GM appears to be willing to continue bucking the industrial trends and to make the same mistakes. 7, count them 7 passanger car divisions of which NONE are sales leaders in any category.
Actually, GM only has six passenger car divisions (Buick, Pontiac, Chevy, Caddy, Saab, Saturn). Their other two light vehicle divisions (Hummer and GMC) only sell trucks.
Let’s look at thier current sales figures:
http://media.gm.com/servlet/GatewayServlet?target=http://image.emerald.gm.com/gmnews/viewpressreldetail.do?domain=2&docid=41791
Everything is down except GMC and Saturn. Saturn’s only up because they gave them a bunch of new product (not replacements for older models, additional models). They will be down from now on, as each new model is a sales dud (just that if you go from three vehicles to six your sales pretty much have to increase). GMC is only up because the new Acadia is selling well; subtract that, and they are also down.
You’ll note from that chart that thier Medium Duty truck line is already in a state of flux. Used to be, GM sold GMC, Chevy, as well as Isuzu medium duty trucks, under an arangement with Isuzu. Now, that’s reversed-Isuzu sells GMC, Chevy, and Isuzu trucks, not GM. (The trucks from all three brands are similiar or the same.)
And, yes, both the Topkick and Kodiak have significantly reduced sales this year over last.
As for dumping some of thier brands, the shut down costs are huge, plus sales will drop by even more. Despite this, I predict they will dump Saturn at the end of it’s current product lifecycle (three years or so). Saab (domestically only; they will survive in Europe) and Hummer might go away as well.