Huh. There can only be three explanations. One: The Wall Street Journal was seriously duped by a stock manipulator or a member of one of GM's warring factions. Two: The Wall Street Journal made shit up– there are no "these people" or "people familiar with the matter" or "people close to senior leadership." Or three: GM is lying; they are considering terminating/selling Buick, GMC, Pontiac, Saab and/or Saturn. Bloomberg ignores the implications and reports the refutation: "GM spokesman Tony Cervone… said no brands are under 'strategic review' beyond Hummer." Well, that's unequivocal. Then again, we know for a fact that GM's use of the term 'strategic review' is misleading; the automaker has shut off all HUMMER's dealer support and new product development. Anyway, the denial puts paid to my theory that GM PR planted the story to bolster the ailing automaker's sagging stock price and help it raise a little money (as in $15b). I mean, GM PR wouldn't purposely plant a story and then deny it, would they? Nah. It's probably one more example of the panic and confusion aboard the holed, listing ship that is General Motors.
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I guess they deny the AP report also:
http://www.detnews.com/apps/pbcs.dll/article?AID=/20080707/AUTO01/807070392
GM said to consider more job cuts, brand reductions
Fisher, I clicked on that Detroit News link, and what should I see in the left-hand column, next to the article “GM Said to Consider…”?
A Toyota advert.
Funny, but in a tearful, sad-clown sort of way.
If they are considering the killing of some brands, then reading between the lines, I’d say that somebody is preparing a bankruptcy plan.
They don’t have the money to kill the brands. The only way that they’ll be able to do it is by allowing the bankruptcy courts to cramdown a deal onto the franchisees.
The bankruptcy may be a backup plan that is not meant to be a Plan A. I’m guessing that Plan A is a bailout, and that they’ll be gunning for that very soon.
With the declining credit markets, I think that they’re going to get that bailout. If the economy remained strong, we could shrug our shoulders and let them die, but now, GM’s failure and the failures of suppliers that would accompany it would hurt the banks too much to just let it happen.
Pch101 Says:
…but now, GM’s failure and the failures of suppliers that would accompany it would hurt the banks too much to just let it happen.
How much is “too much?” Who, if anybody, could be considered the expert on this? Members of Congress? The next US President? The US Supreme Court or banking members of the Fed? Or maybe we should just put it to a vote in the November general election. Oh hell, why not just have a Myspace poll, for all that matters.
I can’t seem to express this strongly enough.
The herd needs to be culled here, and the only way that happens is that some members of the herd…
…die.
The animals and plants that depend on the herd may also suffer. But such is the way of life, and it is the only way that room is made for the renewal that will always come, the next phase, the next period.
Now, in the context of GM, I’m not saying that PEOPLE should die, not at all.
But in this, the only way for the fittest to rise up (and survive), is for the unfit to…
…go.
And as for the upper management of the unfit? I’ve said before that they should not be hired elsewhere. Ever.
Talk of bailouts is depressing to me, because this rewards the incompetent. It rewards those who don’t deserve it! It obviates from people the responsibility of learning from their mistakes. It dis-incentivizes all of us from studying history and from learning from the mistakes of others.
Let’s admit something else, too: politicians are poor choices for deciding what companies live (via subsidy or bailout) and what companies die (via bankruptcy or “other”).
What we end up with is always the same incompetent bureaucratic mess, but by a different name each time. Yet we continue to punish success and reward failure.
And this dooms us to a hellish, never-ending cycle of failure and bailout, failure and bailout.
Who will have the strength to stop this madness? I fear that the people no longer do…
# Pch101 Says:
July 7th, 2008 at 5:57 pm
GM’s failure and the failures of suppliers that would accompany it would hurt the banks too much to just let it happen.
Frankly the banks are in trouble over matters so much greater than GM and it’s suppliers I seriously doubt they will do much of anything.
Rumour has it the banks may be on the hook for over $1,600 billion dollars in shaky debt. The total GM and supplier debt is only a small fraction of the whole.
GM dies, somebody else takes their place. Equilibrium is reestablished and all is good in the world. The bankers will ultimately win, they always do.
In a communication from Mark LeNeve to the GM dealer body, he states that Hummer was and is the only brand under strategic review.
I’m not saying that GM is above planting a story, but there is no logic to planting a story that sews the seeds of potential bankrupcy in the minds of potential consumers.
Did I just use the words “GM” and “logic” in the same sentence?
Every model Saturn currently offers is selling better than last year. The loss of the Ion compact sedan is dropping Saturn’s volume. Poor timing by GM.
The Wall St. Journal doesn’t make a mistake on this kind of story. I believe that this was probably well sourced with at least two independent verifiable sources. I think GM may be parsing words. If they have made a decision to shutter a brand, is it still under strategic review?
“They don’t have the money to kill the brands.”
Nobody has ever answered this question: Why can’t GM kill off brands through starving them to death just like Isuzu did in the US?
roar1 Says:
July 7th, 2008 at 10:05 pm
Every model Saturn currently offers is selling better than last year. The loss of the Ion compact sedan is dropping Saturn’s volume. Poor timing by GM.
You know, the sales figures are right on GM’s website. Before saying things like this, you should check them, to see if what you are saying is actually accurate.
You are right that the reason for Saturn’s overall sales losses are due to replacing a car that sold five to ten thousand units a month (the Ion) with one that struggles to sell a thousand units a month (the Astra). However, sales of the Outlook, Vue, and Sky are also all down (comparing Jan-June 2008 with Jan-June 2007). The only Saturn model with higher sales during that time period is the Aura.
http://media.gm.com/servlet/GatewayServlet?target=http://image.emerald.gm.com/gmnews/viewpressreldetail.do?domain=827&docid=46752
roar1 Says:
July 7th, 2008 at 10:05 pm
Every model Saturn currently offers is selling better than last year. The loss of the Ion compact sedan is dropping Saturn’s volume. Poor timing by GM.
I don’t think anyone considers the demise of the Saturn Ion a “loss”! GM simply dropped the most abysmal car that they were manufacturing at the time (excluding the Chevy Aveo made by GM-Daewoo…it’s a toss up between it and the Ion anyway).
The original vision for Saturn seemed promising- ‘A Different Kind of Car Company’. GM managed to screw it up in ways that no other company possibly could…BIG surprise! The delay in getting the original SL and SC into prodution, not to mention the astronomical budget overages, left Saturn with a car that was outdated from day one. From there, it just kept going downhill and in just a few years had fallen prey to that plague endemic of all GM brands- BADGE ENGINEERING! Actually, it was badge-engineering with Rubbermaid body panels…eek!
GM has so much redundancy and duplication of effort across divisions- their quickly-depleting cash reserves are the only thing that’s kept them in the game this long! Trimming the needless fat (brands) is the only chance for mid- to long-term survival.
Saturn– kill it! Slide the Astra over to the Chevrolet lineup to replace the Aveo. Also, take some of the Aura’s more attractive styling cues (rear end, especially) and make the Malibu into the stunner that it almost already is! Toss out the rest.
Buick– emphasis on the “ICK”! Nobody under 60 wants one of these, the ‘elderly’ stigma associated with the brand is too much to overcome. The folks who buy Buicks will be content with a Cadillac or large Chevrolet.
GMC and Hummer– why have they made it this long??? Buh-bye!
Pontiac- seemed viable as the RWD/performance-oriented division before $4.00 gas, but not any more. Chevrolet will gladly absord the G8 into it’s model lineup, maybe even call it the Impala? The next FWD Impala could easily be renamed.
Cadillac & Saab- integrate Saab into existing Cadillac dealers. The 9-3 slots in well beneath the CTS and the next 9-5 fits in between the CTS and STS. Two luxury brands under one room- one bold American style and the other (northern) European flavored. Just makes sense.
Chevrolet- would relate to Caddy/Saab much like Honda/Acura or Nissan/Infiti- an extensive model lineup covering virtually every type of car/truck/SUV/crossover in every size class.
GM- pay attention! Inside the baffling GM hierarchy, I can scarcely begin to imagine how much money (not to mention effort and talent) is wasted with the existing, mostly-unfocused brands.
Frankly the banks are in trouble over matters so much greater than GM and it’s suppliers I seriously doubt they will do much of anything.
During good times, it wouldn’t be a big deal. The market would chock it up to bad management — easy to do when everyone else is doing well — and it would be a small blip on Wall Street’s balance sheet, as everyone goes on making money.
Today, it would be different. GM is a Dow 30 component; a Chapter 7 liquidation or complete failure of GM would be a major psychological blow to the markets, as it would symbolize that the credit crunch had spread from the mortgage markets into commercial lending. It would be perceived as a huge domino falling, that would topple over something else, that being the core blue chips of Wall Street.
One thing that you have to keep in mind is that the most informed readers of sites like this know a lot more about GM than does your average investor. A lot of the aspects of GM business failures that are well understood by car industry watchers are a total mystery to your average analyst.
When we marvel at Rick Wagoner’s smoke and mirrors and ask ourselves how he gets away with it, you have to remember that he can get away with it because most of his audience doesn’t really understand the industry that well. They tend to comprehend the expense side of the argument (wages, pensions, plant operations), not so much the product or the branding issues that are really the core problems here.
So this whole thing is going to come as a huge shock. While you and I will know that this is decades of incompetent management finally hitting bottom, Wall Street will see this as a massive symbol of something much worse.
The US government can’t afford this and the banks can’t afford this. They bailed out Bear Stearns to prevent a massive chain reaction; I could see GM being bailed out for much the same reasons. It will be bankers’ money, but the feds will have to guarantee it if they are going to loan it.