The Case AGAINST Bailing Out GM/Chrysler

[SuperTrooper]

This editorial contains some of the most cogent thought on this situation I've run across. I was unaware of Cerebus' involvement in GMAC and the benefits a gov't bailout would afford them.

I've spent a good part of the morning reading opinion pro/con as well as thoughts on the original Chrysler bailout in 1979.

I now think both companies should be allowed to go Chapter 11, for reasons stated in the following editorial.

Editorial: Why the GM/Cerberus/Chrysler Bailout is bad for taxpayers and doomed to fail without the benefits of a Chapter 11 filing for both Chrysler and GM | The Truth About Cars

[trebuchet03]

That ws a good read...

I've got one other point that puts secrecy and financial details aside.

1. They have a failing business plan.

SLR
Cobalt Coupe
Corvette
G5
G6
G6 Sedan
Solstice
Sky
9-3
Astra
CTS
DTS
STS
Aveo
Aveo Hatch
Cobalt Sedan
Impala
Malibu
G8
Vibe
Aura
LaCrosse
Lucerne
9-3 Combi
9-5
9-5 Combi
Astra 3 door
Astra Hatch
XLR
Escalade
Escalade EXT
SRX Cross
Avalanche
Equinox
HHR
HHR Panel
Suburban - 1/2 ton, 3/4ton
Tahoe
Trailblazer
H2
H2 SUT
H3
H3T
Torrent
Outlook
VUE
Enclave
Acadia
Envoy
Yukon
Yukon XL
9-7X
Silverado
Colorado
Canyon
Sierra
Express Vans
Savana

Why is that list so long? Okay, a few of those are somewhat repetitious, but GM's total linup is 127... 127! And yes, that's all 7 brands...

This appears to be a case where your diversity is bleeding you dry.

GM Lineup

[RH77]

Exactly Treb...

The Saturn Aura is lost in the shadow of it's sister vehicle, the Malibu -- and they're the same car! (nearly).

I could probably recite similar overlaps + the sparse optioning of economy vehicles. The Aveo/5 needs a lot of help, especially.

-Rick

[red91sit]

I think the main problem is, they're building vehicles that the consumer doesn't want.

So what happens when business can't sell their product for profits? they go bankrupt. I fail to see why this is no longer the norm for big business?

[SuperTrooper]

Originally Posted by RH77

Exactly Treb...

The Saturn Aura is lost in the shadow of it's sister vehicle, the Malibu -- and they're the same car! (nearly).

I could probably recite similar overlaps + the sparse optioning of economy vehicles. The Aveo/5 needs a lot of help, especially.

-Rick

The problem with the Aveo is it sn't really a GM product, but a rebadged Daewoo.

If I had my way:

Scrap Buick, GMC, Pontiac and Hummer.

Keep Caddy as the luxury brand.

Focus Chevy as the value brand.

Focus Saturn as the Euro/sporty brand.

Cut duplicate platforms to the bare minimum.

Sell off Saab.

Do whatever I can to hang on to Opel. They design all the good platforms and this company is going to need all the design help it can get.

[Big Dave]

If it were only so easy.

Eliminating models invites massive litigation by dealers. Just eliminating Olsmobile cost GM $20 bill in litigation.Also the less cars GM/Chrysler?Ford sell, the less profit percar because they have enormous legacy costs (pensions, health care).

I suspect by 2010 there will be no auto industry in the US.

Card-check unionization will drive off the transplants.

Tesla has already burned through their capital. Aptera is a limited-production motorcycle.

Just as well. RFK, Jr. (Obama's choice for EPA Administrator) wants to close down all the oil refineries, so we'll drive imported cars with imported gas.

[NeilBlanchard]

Hi Dave,

How do you know who will lead the EPA? The top Google search item for this turns up:

Bloomberg's projected short list for EPA top dog: Democratic Kansas Gov. Kathleen Sebelius, 60, once considered to have a shot at Obama's veep slot ultimately filled by Delaware Sen. Joe Biden; Kathleen McGinty, former secretary of Pennsylvania's Department of Environmental Protection; Mary Nichols, chair of California's Air Resources Board; and Ian Bowles, secretary of the Massachusetts Executive Office of Energy and Environmental Affairs.

A flashier but potentially fiery pick, according to Bloomberg: enviro activist Robert F. Kennedy, Jr., scion of the Kennedy dynasty and occasional Rolling Stone contributor. Kennedy, 54, son of Ethel and the late Sen. Robert Kennedy, chairs the Waterkeeper Alliance, an organization based in Irvington, N.Y., dedicated to promoting clean water, but he has taken some heat from the science community for his belief in a connection between autism and vaccines, an issue examined in detail by Scientific American Mind columnists Scott O. Lilienfeld and Hal Arkowitz in 2007.

Back on topic: I would agree that not paring down the stupidly overwrought product line down to a minimum will virtually guarantee than GM will fail. Hard choices have to be made, sooner rather than later: simplify everything about GM or lose everything.

Build the EV1 right now as a Saturn. Do a quick "EcoModder" overhaul on the most economical models. Build utilitarian trucks, and cars: hatchbacks, sedans, station wagons, and the smallest minivans, only.

[Formula413]

GM really is between a rock and a hard place with their numerous superfluous brands. They need to ditch half or more of them but where will that leave the dealers? They are in huge trouble right now, they have less than a year of cash left, that isn't going to be enough to weather the current economic crisis. Plus they have stopped new vehicle development, so even if they can pull through they will have nothing but outdated technology to sell. This really might be the end.

[RH77]

Originally Posted by Big Dave

Just as well. RFK, Jr. (Obama's choice for EPA Administrator) wants to close down all the oil refineries, so we'll drive imported cars with imported gas.

Do NOT bring such politics into this discussion.

-Rick
Moderator

[Big Dave]

The question is who gets what in a liquidation. I figure Toyota will get GM Powertrain. Engines are Toyota's weakpoint and GM Powertrain is one of the world's two best engine opertaions (Honda is the other one). Corvette will be a rousing auction.

Maybe some Europeans buy Jeep. The Chinese will buy a one of Chrysler's engine plants.

GM Powertrain, Corvette, Jeep and the Chrysler engine plant get moved offshore.

The rest is scrap metal.