• GM’s liquidity situation is dire. According to the company’s restructuring plan that was submitted to Congress on Tuesday, it looks like GM burned another $7 billion in October and November, and should be about cash flow neutral in December; making Q4 another $7b burn quarter.
• As such, GM requires $4 billion of government loans immediately, with another $4 billion in January and an additional $2 billion by the end of 1Q09.
• At the end of 1Q09, GM will have drawn $10 billion under its base case assumption, and possibly as much as $15 billion under its downside demand assumption.
• The $18b in requested funding ($12b in loans and a $6b credit line) is in addition to the estimated $8.3 billion that GM is anticipating in Government loans under the ($25b) DOE program for fuel efficient powertrain technology investments.
• One of our primary concerns here is that the downside scenario is not much worse than the current run rate of sales (about 10 million units) and would still leave GM in the liquidity danger zone (with about $13 billion at the end of March) despite having drawn $15 billion in Federal funds.
• And what happens after that? If US sales remain in the 10-12m range and GM burns another $7 billion in 2Q09 it could see its liquidity drop to only $9 billion, even after drawing the final $3 billion in Government money (maxing out at the requested $18 billion). In this case, the Government may have to write another check before the end of 2Q09.
Oh, I found some footage of Wagoner’s drive out to DC.
If those stiff Swiss watched SNL carefully, they would understand that extended hand shall not go away.
GM liquidity explained.
Thanks Robert.
Silly me and I thought they had B10 left As of Dec 01. As always: reality makes you cry more than the GM-Fiction
Hopefully people will recall the moment a couple of weeks ago when the head of the 3 were asked if they would promise not to come back for more if they were given the 25B, and no one replied.
shouldn’t this be bailout watch 233? the preceding one was numbered 232.
Those are staggering sums of money. And the picture still looks grim. Maybe GM will be able to sell Hummer, Saab and Saturn for $100 billion. Then they’ll be able to leave the American and Canadian taxpayers alone. At least until 2010 when they burn through that too. I hate always sounding like a pessimist.
there is one who can save the day but for lack of understanding it all sits on the sidelene. shame when so many have been informed yet pay no attention. oh well, maybe it’s time to go another direction for those in this business are too stupid to know the difference.
Ah 1958. I think the Chevy and the Cadillac for that year still look nice. The Pontiac, Buick and Oldsmobile were ehhh.
So the pro finance people understand that The Plan is smoke and mirrors, will Congress?
I can’t for my life understand what’s eating through that pile of cash. Burning 7 billion dollars every quarter is such a staggering amount of loss, it’s almost incomprehensible. I mean, how do they do it? Even setting fire on that money quite litterary, in a bonfire, would take more time than it takes for GM. They are not insolvent, they are experiencing a mid air break up of the fuselage, crashing sometimes next year, bail out or no bail out…
Buickman,
That would be an understatement.!!
Trying to educate the sheople is a waste of energy!
I must admit, I too am very stupid!! For wasting the best years of my life in this GM dealership, instead of learning to speak Chinese!!
Buickman: why don’t you post your manifesto for Return to Greatness here on TTAC. No offense, but your prescription for what ails Detroit seems remarkably simplistic.
Oh yeah, money given to GM is certainly well spent.
P.S. I relly like the 58 Chevys too. I’ve got a 58 Chevy truck that I think is fabulous.
Robert & Lumbergh21: I have to be the contrarian. I’ve always felt that although the 58 GM line had a certain attractiveness, it did not hold a candle to the 58 MoPars (which were year-old designs in 58). Both in looks and in performance. The DeSoto is my personal favorite. Long, low, clean. Recall that GM panicked and pulled the plug on the 58s before they even went on sale. The 59s were a crash program started in late 56 when the new MoPar Forward Look hit the streets.
I’m forming this thesis in my head as I type, so I am open to other ideas, but is the axing of the 1958 GM line after a single year the last example of GM reacting visibly and decisively in response to a plan gone wrong? I think that GM was at the top of its game in 1958. A company that is a genuine leader will recognize when it has been leapfrogged. GM recognized it in 1956-58, but seems to have lost that ability later, certainly by the end of the 60s, in my view.
How GM Makes Money Vanish*
*- numbers are for illustrative purposes only. The reality is likely far worse.
GM sat down at the end of the month to tally up its bills. It had 15 billion at the beginning of the month, paid 5 billion in loan-shark payments, 4 billion to make some cars and trucks, 7 billion for retired UAW Viagra, and another 3 billion for that Delphi ickyness. The yessirhowhighsir market forecasters said they’d bring in 16 billion in product sales for that month since the car business was in a rough patch, but the dealers only took 12 billion of stuff. Oops, bye bye 7 billion. One more month of that and *clang*.
For the record, 1958 ushered in an era of astonishingly hideous vehicles from all of Detroit which wouldn’t lift until 1963 or so.
It’s almost too bad that dealers are independent operators- GM should hire Buickman to train their sales staff.
Really, I leave whenever I encounter a sleazy salesman, nice car or not.