The Associated Press is reporting that General Motors now plans to sell back its 3.02 percent in Suzuki for $230m. Buckingham Research Group’s Joseph C Amaturo gets credit for pointing out that “while the sale is indicative of GM’s near-term liquidity challenges, the proceeds are not very meaningful.” In other words, it takes a lot of $230 millions to fill a $5b hole. “GM is expected to burn $4 billion to $5 billion in (the fourth-quarter) or roughly $1.5 billion per month. Hence, the cash proceeds from the sale of its equity stake will not even cover one week of expected cash burn,” Amaturo said. Not that it’s bothering Suzuki. “We fully understand the necessity for GM to raise cash,” Suzuki chairman and chief executive Osamu Suzuki noted dryly, adding that GM and Suzuki would continue to pursue a business partnership. Joint development of hybrid vehicles and a joint venture building sports utility vehicles in Canada are said to be on the collaboration agenda. The two automakers are also joint stakeholders in GM’s currently-stalled South Korean operations, GM-DAT. GM has owned portions of Suzuki since 1981, only selling off 17 percent in 2006. The saddest part of this story? It decreases the likelihood that GM will help bring Suzuki’s current (well-received) Swift to the states. Not that they needed a competitive small car or anything.
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If fate of FIAT is any indication, Suzuki is on the road to riches.
I’ll say it again: GM is not a viable business anymore. Period. On the bright side of things, GM’s stock is up 11% for the day as I’m typing this which shows how irrational the investing public is.
GM once had a compelling vision of creating a global network of affiliates, each free to be creative and independent but at the same time leveraging the purchasing power and development resources of each other. Strategically it was brilliant, but GM management could never conduct the orchestra. Fiat(which includes Alfa, Ferrari, Maserati & Lancia), Subaru, Suzuki, Isuzu, Daewoo, Saab and the various wholly owned GM companies all were positioned to operate autonomously while also leveraging the whole. But, alas, the leaders in Detroit weren’t leaders at all and couldn’t make music. In disgust, every talented musician who could, found a way to leave the orchestra and go form other musical alliances.
11% of 3.35.
When you get down to penny stock level, any days average fluctuation looks massive.
People often forget (or don’t even know) that Suzuki is only a “3rd rate never thought of, small non-contender” in North America.
In India, Suzuki-Maruti is #1. In Japan, Suzuki is #1 in Kei cars, the #1 category of automobildom.
In several other countries of importance for the future of the worldwide automotive industry, Suzuki has a good footing, presence and significant market share (and profits).
Even so, it may not be “enough” to survive the coming worldwide economic Tsunami.
I suspect that a Suzuki-Mitsubishi tie-up is probably in the best interests of both. As in, a merger, or marriage. For the most part, these two companies have complementary line-ups worldwide, with only moderate amounts of direct competition.
I think it’d be a better tie-up than Nissan and Renault.
Plus the company could have the backing of two heavy weights, Mitsubishi Motors’ parents, Mitsubishi Bank and Mitsubishi Heavy Industries (which opened up the spare bedroom to let Mitsubishi Motors boomerang home after the nasty divorce from Daimler-Chrysler a few years back).
Yea, I don’t get why GM stocks aren’t trading at less than a buck. Don’t people get that no matter what happens to GM (bailout or CH11), either option will result in a large (if not total) loss in shareholder equity?
230 million? Woohoo! Post-it notes for everyone!
John
And why would this have an impact on whether Suzuki imports the Swift?
If 3% of Suzuki is worth $230 million, that means all of Suzuki, its market cap, would be $7.7 billion. According to Google Finance, right now, General Motors’ market cap is about $2.05 billion. Yes, friends, Suzuki Motors is worth almost 4 times as much as General Motors.
Suzuki will still be around 12 months from now, GM will not.
I can’t see GM still bleeding 1.5 billion a month this time next year (as it has for much of the last 24 months), can you?
Paul: It wouldn’t prevent a straight Suzuki import, but it makes a Geo Metro redux (or other rebadge scheme) less likely. Or not. Mostly I just wanted voice my support for anything that brings that car here.
Yahoo! Today, get to work on a Saab V6, the motor they never needed!(and typically ends Saab ownership) Then, the countless other boners Lutz etal have pulled over the years. No 4cylinder turbodiesels(except mine), hybrids??…just a fad.
Now theyre finally building a four cylinder plant in Flint? These guys need a oneway tarred and feathered ride outta town.
GM is like a crack addict but instead of having 6 kids with 5 baby daddy, they have thousands of employees. Now, baby momma needs some welfare cuz she done blew all her savings by poor planning and basically being stoned all the time.
Can anyone tell me why they shouldn’t sell SAAB as well?
Does anyone want Saab anymore? Does Saab have it’s own platforms and engines or are they the same platform as the aura/g6/malibu? I don’t think buying Saab would get the buyer much, other then a damaged brand.
Can anyone tell me why they shouldn’t sell SAAB as well?
I don’t think the problem is that GM is reluctant to sell, but rather someone else willing to buy (or at least buy at GM’s asking price).
Saab, as it is, isn’t worth anything. It is sort of GM’s version of Jaguar, a company that you have to pay someone to take off your hands (liabilities exceed worth).