Another scribe joins the elite squad of automotive analysts who’ve had their Road to Damascus moment re: GM’s inexorable slide into bankruptcy. Alex Taylor Three Sticks’ misFortunate conversion was inspired by the epic tomfoolery commonly known as the GM – Chrysler merger. Taylor warms-up by pre-spinning the General’s forthcoming pitch for a federal bailout. “A government loan wouldn’t be about protecting well-compensated union jobs or keeping afloat inefficient suppliers in Michigan and Ohio. It could be directed toward advancing Detroit’s and the country’s strategic interests by speeding development of alternative fuel technologies that reduce our dependence on foreign oil as well as help limit the generation of greenhouse gases.” Hang on; isn’t the rationale behind the current Department of Energy bailout loan program? Anyway, “GM may have a decent shot at that in a Democratic administration. If not, there is bankruptcy.” Da-da-DAAAAAA. OK, make the jump for Alex’ conclusion, his very own version of “Dr. Strangelove or How I Learned to Stop Worrying and Love a Cadillac CTS for 25 Grand.” [thanks to Polishdon for the link]
“Bankruptcy would give GM a chance to negotiate further cost reductions with its union workers, work out its obligations with those suppliers that are still solvent, and help speed the rationalization of its dealer body.
Would GM then be stigmatized as the only bankrupt auto company? No way. Ford (F, Fortune 500) and Chrysler would immediately find that they have been made uncompetitive by GM’s actions and quickly follow it into Chapter 11.
Flying one bankrupt airline felt a little awkward, but by the time half a dozen were in the same condition, it seemed perfectly natural. That would apply to the Detroit Three. There is still an appetite out there in America’s heartland for Detroit iron, and in the end bankruptcy may be the best way to continue to satisfy it.”
I think for the big three, this is what will happen:
GM: Bankrupty, shedding of several division, etc and revived with two or three divisions left.
Ford: Probably will survive.
Chrysler: Cerberus Capital has used Bankruptcy in the past (Bluebird Bus, etc) to return the company to profitability. But the problem is that Diamler killed off most of what was great about Chrysler in the merger. Diamler took the money and knowledge and gave few trinkets in return. Then spit out the remains. Chrysler’s only chance to survive is to merger. Personnaly, they should merger with Renault/Nissan. This allows the new merged company to “offer” dealers a brand new Renault franchise instead of Chrysler/Dodge/Jeep. This could drop the dealer overload by maybe half, giving the remaining dealers better profits. And gives Renault an instant presence in the entire US. I think that is why you keep hearing that Renault is interested in Chrysler.
Will it happen ?
Wait, can someone please clarify where “Cassandra Watch” is coming from….I keep seeing this around this site and I have no idea what it refers to.
I was trying to sell a Daewoo a little while ago (remember them?).
A friend of mine was curious about the car. I told him that it was nice, had less than 100k miles, didn’t leak any fluids, etc. His big question was where would he get parts for this thing when it started breaking.
Good question, I thought. I didn’t know the answer.
This has to apply to GM. If you buy tickets on a bankrupt airline, what’s the worst that happens? You’re out a few hundred bucks, at worst.
What if you can’t find a transmission for your now-bankrupt GM product? Or an A/C compressor? I would be worried about buying a car from a bankrupt company.
Cassandra
http://en.wikipedia.org/wiki/Cassandra
Her beauty caused Apollo to grant her the gift of prophecy. However, when she did not return his love, Apollo placed a curse on her so that no one would ever believe her predictions.
It seems to me that these recent stories have all the earmarks of a “trial balloon” being floated surreptitiously by GM, behind the scenes, to gauge reaction from the public and the financial markets.
Why have all these mainstream reporters suddenly seen the light? Could it be that GM’s handed them a candle?
Ahhh, what am I thinking? GM can’t possibly be that smart.
Or could they?
Polishdon: that’s the best case I’ve yet heard for Renault/Chrysler.
Also, the irony overload of Renault owning Jeep would be delicious.
What if you can’t find a transmission for your now-bankrupt GM product? Or an A/C compressor? I would be worried about buying a car from a bankrupt company.
After market, if there is money to be made supplying parts for cars someone will fill the need. There are lots of GM cars and trucks out there that break a lot so major parts should still be found even decades after their death. Daewoo didn’t sell that many cars here and their cars tend to be on the disposable side since there were so cheap to begin with so there isn’t much money to be made making parts for it here. I bet that some GM parts might work though since they are part GM owned and the Aveo is just a Daewoo.
The big big problem with buying from a bankrupt automaker is resale, as you must be noticing from that Daewoo. If you buy from a dieing company and they really die what will your car be worth before you even finish paying it off. It would be like buying a house for $300,000 and watching its value drop to $140,000 2 years after you bought it. There are people that dumb in this country. But I don’t think they will be that dumb a second time.
The cars would have to sell for dirt cheap prices to get me to consider one, like a G8 GT or Sierra extended cab for $13,000 new.
You also take a gamble on the warranty and shelling out big money for repairs while you are still paying on it because there is no one to back that warranty.
Re: Cassandra Watch
I thought the “Cassandra Watch” series name was referring to the 1976 film “The Cassandra Crossing” with Sophia Loren because the first post featured a picture of her titled “What a great movie THAT was…“. And I didn’t understand the connection. I thought that I was just stupid or too unplugged.
Now that I know the title refers to Greek mythology, it makes more sense.
faster_than_rabbit:
And if history is to follow, Renault/Nissan will be cursed with Jeep !
Every company that has owned the make has had financial trouble.
Flying one bankrupt airline felt a little awkward, but by the time half a dozen were in the same condition, it seemed perfectly natural
Does Alex not realize the fact that one doesn’t finance or lease an airline ticket, and when you’re done with the flight you have no further obligation?
Further, common sense dictates that the quality of parts in a vehicle made by a soon-to-be or already-bankrupt manufacturer aren’t going to be better than average. So who cares if aftermarket parts are available. I’ll trade my years of work, effort, and toiling (plus a loan from a credit union) for a vehicle from a sound manufacturer who doesn’t treat parts suppliers as adversaries.
“Her beauty caused Apollo to grant her the gift of prophecy”
So the reason Mr. Farago’s site is so great is that he’s hot?
Robert, you’ve got some balls to be identifying by name these Johnny-come-lately reporters and editorialists as they begin to see the .. er, “light.”
I commend you.
It takes guts.
And it identifies, after a fashion, members of the press who may be unfit for what the job truly entails (or should entail): Seeing and reporting the facts…essentially, discovering and then TELLING the truth.
By watching the major media outlets and participants, and by taking notes, you are helping yourself by reducing the pool of potential future TTAC journalists, purely by evidence (or lack thereof) of attentiveness and/or competence.
Bravo to you sir, and may you be left with the cream that floats to the top!