I was wondering why this morning’s Automotive News [sub] was revisiting the story on GM’s product development cutback. True: it was THE story of last week. And the new quote from analytical superstar John Casesa is pregnant with foreboding. “It’s really the last resort and underscores how dire the liquidity situation has become.” And now, the money shot: “According to one informed estimate, GM may have about $17 billion in cash left. Since the company needs $11 billion to $14 billion on hand to maintain normal operations, it may face a cash-flow crisis this winter.” MAY? GM’s burning through a billion a month. Without special write-offs or cash calls, The General will run out of liquidity by January. As with Chrysler, even approaching a cash conflagration flame-out puts the ailing American automaker in dire straits. Suppliers, who are busy going to the wall, may demand cash up front, whittling GM’s “pad” down to, well, nothing. If there’s a “run on the bank,” GM’s suppliers could throw GM into C11.
Find Reviews by Make:
Read all comments
You know it will be all in the next numbers due out today. If GM relatively slips behind Toyota et.al., that will be the game. To argue even the competitors are hurting is to beg the question of who is reallyl losing this war. GM cannot possibly shrink it’s way out of this mess and unless sales (profitable ones at that) start to come quickly, no government or merger, or techno talk of the future counts. What is the big anchor to these sales? It is consumer doubt. I now have two doubts as a buyer. The original doubt was my American car purchase needs a huge discount to offset the poor trade in value. The new doubt, what warranty protection and will there be any service for my orphaned car? It has been devistating to see the big three orphan models at great expense, what happens when entire divisions or corporations go away?
I pose this as a serious question: do people reckon the absolute last-gasp severity of the crisis has really – I mean really – hit home at the RenCen yet?
I think the fools in the RenCen know exactly what is happening to them (caused by them), and they have been scrambling for the last several years to prevent the inevitable. Not by making the hard choices, mind you, but by putting band-aids on everything and putting out fire after fire.
HPE :
I pose this as a serious question: do people reckon the absolute last-gasp severity of the crisis has really – I mean really – hit home at the RenCen yet?
I pose this as a serious answer: No.
Just my opinion, of course.
There’s a corpse inside that old GM refrigerator…and SOMEONE is about to open the door.
Yes, I can smell the STENCH all the way out here on the West Coast!! The ghastly stink, the decay, the putrefaction…
…and worst of all, those Cobalts!! THOSE COBALTS…OMG, so AWFUL.
OMG, Today is going to be SUCH a WONDERFUL DAY! :)
Take it like a Man’s Man, there GM. You’ve done America Proud. You’re such an inspiration to all…may you get what you truly deserve- Janet Jackson’s nipple.
If their logic is that no one will buy from a bankrupt automaker, then today should prove that no one will buy from an almost bankrupt automaker either. The mainstream media has (finally) caught on to the imminent downfall of one or more of the Big 3 and the stories in the news are more than enough to scare away the loyalist of buyers. I might be really interested in a Saturn Outlook save for 1) the Outlook may be toast, 2) Saturn may be toast or 3) all of GM may be toast. If I were to switch and buy a Traverse figuring the Chevrolet brand is bankruptcy proof, I’d still be facing catastrophic depreciation when the house of cards falls. All of these factors serve to make a Honda Pilot mighty attractive (ugly front clip not withstanding).
Get out there and buy a Malibu guys! There’s still time!
I didn’t believe that the cash would last until the end of 09, but now they have a month or two left? I think only losing a billion a month must look like the good old days at Rencen.
You’ll be able to buy that 2009 Malibu even cheaper after they go C11.
When do these financial statements get released? I would have thought we would have seen them by now, like weeks ago, are they stalling on them or something. When they come out we will be able to put a very real count down clock on this whole situation.
I had a feeling that “we have enough cash until the end of 2009”, was BS. I just don’t trust Wagoner to be right on anything. Shouldn’t have used a conservative estimate buddy, you should have planned for the absolute worst. Guess your going to get caught with your pants down again because you aren’t even considering bankruptcy. When it happens you will be forced in to liquidation instead of reorganization.
“I just don’t trust Wagoner to be right on anything.”
Indeed, Harvard may need to rename it’s premier business education degree the MDA, Masters of Disaster Administration; Masters of Disasters in the vernacular.
In regards to why the financials haven’t been released yet, the chef is busy in the kitchen cooking like mad, your order will be ready soon.
I just saw the SEMA Camaros, and it would suck if GM goes under, that’s for sure…
GM needs to be ready to file for C11 in January while a new administration is just getting their ears wet. They can’t allow GM to go under in the first week of the Obama era.
I am not opposed to a federal bailout — if every exec in GM has to resign. There are a lot of good people there, but it is time for a fresh start. Bring in a german or something to run the place.
Snabster: Because Ze German did such wonders for Chrysler? Look how that legacy is turning out.
I understand why automotive “journalists” have missed this story for quite awhile (since their journalistic efforts are limited to indulging in press junkets rather than digging for the real stories), but why are all the auto industry analysts just figuring this all out? I guarantee Mr. Caesea is making way more than RF, who predicted many months ago that GM wouldn’t make it through 2008 (it was in one of the comments sections). Hey, RF, have you thought of becoming a professional analyst instead? Or is the BS quotient just way too high?
Toss the analysts (plus the “journalists”) out with the execs.
By the way, HPE, I think the recent panicky actions indicate that RenCen has just woken up in the last month or two. Way too little, WAY too late.
Sorry, repost. WP is acting funky today.
I’d bet that they’ll have major discounts at year end in order to put more cash on the balance sheet. They’d call it a Holiday Sale or something of the sort, but it would really just be an attempt to have more money in the bank and to keep the sales figures high. The rebates should be even bigger than they are now.
Just make GM NA a re-engineering outfit. Taking decent cars from the GM operations from around the world, adapting them to the unique qualities that the american public requires so that they will buy them. Then you won’t have the need for CEO’s CFO’s etc… just a plant manager and a decent engineering staff.
Was that last sentence an oxymoron?
I can not believe for the life of me that the once mighty General Motors has been reduced to this: Just a tiny amount cash keeping the company from completely imploding.
It is like what Tori Amos once said, “Know the honey from the killer bees.” GM and Wrong-Way Rick thought the SUV market was an endless stream of honey. It quickly turned into a swarm of killer bees that stung The General to death.