Ford CEO Alan Mulally goes to bed every night and prays that GM does a deal for Chrysler. In the morning, Big Al digests his corporate PR brief looking for missives from automotive and Wall Street scribes praising the combination of dumb and dumber. Every afternoon, he reviews Ford’s daily sales figures and wonders when the pain will stop. And soon, he’ll be rewarded with news he wants: his two Motown rivals will be bedding down together. “Thank you God, baby Jesus, and Fritz Henderson,” he’ll whisper to his wife. “Redemption is mine.”

General Motors is on the brink of a financial disaster. It’s managed to keep out of the abyss through asset sales, hocking the company store, and yes, cost cutting. CEO Rick Wagoner’s “plan” might have worked had the economic winds blown more favorably. But they didn’t. The automaker is months away from a liquidity meltdown. Everyone who supplies GM knows it. The rating agencies know it. And yes, Rick Wagoner knows it. GM has to secure new funding or face a bankruptcy judge in Lower Manhattan. So now let’s talk about Chrysler…

GMAC will go bankrupt. The U.S lending giant is cut off from all lending sources. Smart depositors will flee its small bank (relative to GMAC itself). And its majority owner, Cerberus, won’t save it. It’s a pure liquidation play now– with the bank going into FDIC receivership, maybe as soon as this Friday. Whether or not all Hell will break loose is an open question, with many answers…

There are winners in every financial disaster. There are always a few folks– heroes or scoundrels depending on how they make their profits– who understand that the Chinese symbol for danger and opportunity are one and the same. GM’s impending bankruptcy (and likely Ford as well) will produce some winners. But not without serious financial and psychological risk to those who seek their fortune from misfortune. For those of you with a robust constitution, here’s one potential game plan for GM’s C11. First, some background for those uninitiated in the ways of the American automobile business…

Consumers will not buy a new vehicle from a bankrupt carmaker. That’s the over-arching fear preventing GM from filing for a court-managed rescue: a total collapse of consumer confidence in the company’s products. History suggests that a GM C11 would indeed trigger carmegeddon. Ask an automotive historian to name an American automaker that filed for bankruptcy, survived, emerged and thrived and you get a doughnut-hole shaped answer. But I submit that GM will reorganize successfully. C11 will be a new beginning for GM, its suppliers, dealers, workers and, yes, customers– not the end of everything. But let’s start from the corporate perspective…

When a company doesn’t have enough money to pay creditors what they’re owed, it’s considered insolvent. By this definition, GM is insolvent. The American automaker’s working capital stands at negative $20b. Cash outflow for the half year through June 30 remains negative, at over seven billion dollars. And it’s getting worse, as cash calls arrive on a regular– and irregular– basis. There’s no more credit to tap, and GM has few assets of meaningful value left to sell. Oh yeah, GM’s gonna file for bankruptcy. Then what?

Selling eight brands’ worth of vehicles under the “Employee Pricing for Everyone” banner does nothing to reassure jaded “I won’t ever buy domestic” car shoppers that GM isn’t Wal-Mart. Even so, GM makes some great– well very good anyway– rolling stock. But a quick bailout from the Feds won’t fix the cash-burning automaker in time for consumers to discover this fact. It will simply prolong The General’s “we’ll muddle through” mess until the next crisis. What GM’s North American ops really need is a full, head-on crash into the wall of bankruptcy, followed by private DIP (debtor-in-possession) financing. Meanwhile, it’s a real Saab story.

GM’s North American Operations will go bankrupt. This statement will not come as a “revelation” to many TTAC readers. Of course, there are still some who will continue to claim that this website is “crying wolf” regarding The General's descent into ignominy. But to challenge any outcome other than a Chapter 11 filing borders on lunacy. As its centennial mark approaches, the vertex of the perfect storm now engulfs The General. Like it or not, believe it nor not, it's a tempest that will engulf the ship and send it to a rocky bottom. 

In a recent article, The Economist wondered if Detroit's automakers would win their "race against time." In other words, will Ford, GM or Chrysler return to profitability before their cash conflagration throws them into the Chapter 11 burn unit? At the risk of providing a piercing glimpse into the obvious, The Big 2.8 need to change course or flame out. STAT. The Economist rightly suggests that Ford is the only carmaker of the three with a coherent strategy for escaping C11. For contrast, let's recap GM's and Chrysler's plans…

It comes as no surprise that GMAC and Chrysler Financial no longer offer leases in North America. Ford Motor Credit now joins the "no lease" club by pricing its leases sky high making them unaffordable. Why now? It's simple; the captive finance arms can't get the funding to support these transactions due to the deteriorating credit of the finance arms and their parent automakers. 

Chrysler Financial has pulled the plug on new vehicle leases. Given ongoing bankruptcy rumors, the automaker’s co-Prez immediately manned the PR barricades. Jim Press reassured the world that Chrysler is simply diverting lease subsidies into “traditional financing.” That way, “many customers” could enjoy “about” the same monthly payment that they “would have had” in a lease. Meanwhile, ChryCo spokeswoman Shawn Morgan sang the same old song. "Despite the challenges, Chrysler continues to meet or exceed its plan on all financial metrics." C’mon, really?

BMW doesn’t need to advertise their “ultimate driving machines.” After decades building and selling vehicles offering sporting luxury, BMW has trained its customers to intuitively understand their products' appeal. Brands take years if not decades to develop, millions to billions of dollars to engender, and require careful stewardship to sustain. Contrary to much of this website’s commentary, GM’s management is not stupid. They know that Buick, GMC, Pontiac, Saab and Saturn are “damaged brands” in North America. But unless General Motors’ execs follow Bimmer's lead, and soon, the company will fail.