GM in trouble

[ChevyChaser]

G.M., Once a Powerhouse, Pleads for Bailout

By BILL VLASIC
Published: November 11, 2008
New York Times

DETROIT — Just two months after celebrating its 100th birthday, General Motors is facing the grim prognosis that it may not survive to see another year unless it is rescued by a bailout from the federal government.
Rick Wagoner, G.M.’s chief, said his company needed help immediately.
Its cash cushion has been shrinking by more than $2 billion a month this fall. If that continues, G.M.’s reserves will fall below the minimum of $10 billion in cash it needs to run its global operations by January, the company said in its third-quarter S.E.C. filing.
In that event, G.M. said it might be unable to pay its suppliers, meet its loan covenants or cover health care obligations in its labor contracts. The extent of G.M.’s financial crisis, revealed in greater detail in its filing than it acknowledged before, is proving to be far worse than investors and analysts expected just last week.
Only an emergency federal bailout seemingly stands between G.M. and a bankruptcy filing, according to industry analysts.
As the G.M.’s crisis deepens, the pressure increases in Washington to pass a rescue package for up to $50 billion in assistance for Detroit’s troubled Big Three or risk the economic fallout of a bankruptcy that would affect hundreds of thousands of jobs that rely on the auto industry.
Democratic Congressional leaders said Tuesday they would push next week for emergency legislation to help the automakers.
Despite a recent plea from President-elect Barack Obama, the Bush administration has been unwilling to commit any funds to Detroit beyond a $25 billion loan program to assist the companies in developing more fuel-efficient cars.
G.M.’s chairman, Rick Wagoner, says the company cannot wait for aid that may come when Mr. Obama takes office in January.
“This is an issue that needs to be addressed urgently,” Mr. Wagoner said in an interview with Automotive News.
Investors drove G.M.’s stock down for a fifth consecutive day Tuesday. The company’s market value fell to about $1.7 billion, a more than 90 percent decline from a year ago. A spokesman for G.M., Steve Harris, said Tuesday that Mr. Wagoner’s job was not in jeopardy and reaffirmed the G.M. board’s support for its embattled chairman.
“Nothing has changed relative to the G.M. board’s support for the G.M. management team during this historically difficult economic period for the U.S. auto industry,” he said.
The depths of G.M.’s problems came to light in its federal filing that painted a bleak picture of a company that has lost more than $20 billion this year and is in danger of not being able to pay its bills in a few weeks.
“We do not currently expect our operations to generate sufficient cash flow to fund our obligations as they come due,” the company said. “And we do not have other traditional sources of liquidity available to fund these obligations.”
G.M. ended the third quarter with $16.2 billion in available cash. The company estimates it needs a minimum of $11 billion at any time to pay its bills.
At its current pace, G.M. will have less than $10 billion by the end of the year — and that is after cutting 30 percent of its white-collar work force, halting the development of new models and temporarily shutting down most of its North American assembly plants in a desperate bid to save money.
The credit-rating agency Standard & Poor’s cut its ratings on G.M. debt further into junk status on Tuesday, and Fitch ratings is also considering another cut.
Analysts said G.M.’s inability to raise cash, other than from federal loans, will force another, deeper round of restructuring — at a minimum — to keep it solvent.
“We expect cash outflows to quickly reduce the company’s liquidity during the next few quarters, perhaps to levels that would force G.M. to consider a financial restructuring, even if it does not file for bankruptcy,” S. & P. said.
By its own admission, G.M. cannot cut its costs fast enough to balance the sharp fall in revenue in what is the worst United States vehicle market in 15 years.
“Looking into the first two quarters of 2009, even with our planned actions, our estimated liquidity will fall significantly short of the minimum required to operate our business,” the company said its third-quarter filing.
G.M. said the deterioration in its balance sheet could make it difficult to pay its suppliers by the end of this year, and it has no other sources of cash to tap except federal funds.
It also said it might not be in compliance with its credit agreements, including a $4.5 billion revolving credit line and a $1.5 billion term loan. “There is no assurance we could cure a default, secure a waiver or arrange substitute financing,” G.M. said.

[tidus1203]

Yep GM is in real serious trouble. And not only them, all BIG 3 US carmakers are in big big trouble. We could have the death of the US auto industry , and all our cars will now come from Asia and Europe.

[uls]

haha

GM stock



bilis na..

ayaw pa mag zero e

[tidus1203]

The media says its a 60 year low. Pathetic, they fail to say that 60 years ago $3 can go a long way now you get a gallon of gas That is what GM stock is worth now

[uls]

GM's market capitalization today is $1.88B

compare that to Toyota's market cap $99.03B today

Pathetic

[ChevyChaser]

Haaaaayyyy!!!! Sarap talaga muhay sa AMERICA. May Financial Crisis na, May mga mawalan pa ng trabaho, May mabaon pa sa utang.

I wonder how long it will take before the US will finally call it quits.

[Monseratto]

Paano yung mga chevy cars dito sa pinas? Kawawa dati yung mga buyers ng Daewoo Espero at Racer. Now uulit na naman?

[MAXBUWAYA]

i think they are shifting in building fuel efficient cars. makakarecover ulit iyan

[uls]

Every car maker - japanese, korean, european, chinese - also make fuel efficient cars.

GM won't have any advantage even if it makes fuel efficient cars.

[CoDer]

Ayan panay sirain at matatakaw sa gas lang kasi ang ginagawa nilang sasakyan. Sablay talaga sa quality gawa nila.

[ChevyChaser]

i think they are shifting in building fuel efficient cars. makakarecover ulit iyan

Even if they do, who's going to buy them given GM's products are konwn as guzzler, unless they can develop a car that runs on Bud.

Also, GM needs a minimum of US$11 Bn just to pay its obligations, where will they get the capital to develop a new fuel efficient product.

Unless the whole US Financial crisis is resolved, I think GM is headed down the sewers.

For the overseas concern, we'll just have to wait and see what happens. For the moment, I'm not that concerned as most GM products sold in Asia does not come from the US.

[niky]

GM's cars aren't categorically less efficient than the competition in their chosen categories... they're just completely uncompetitive.

Add to that the perception gap... most people in the US view GM's products (and Ford's... and Chrysler's...) as junk. Nobody's buying... and that's bad for GM.
The big question is... does GM deserve to be saved as GM? or should the US government let the business declare Chapter 11 and have GM's subsidiaries sold to other, more efficient organizations?

[Monseratto]

Guess who'll gobble up the Money Tree?

[tidus1203]

http://biz.yahoo.com/ap/081117/as_japan_suzuki_gm.html

GM is selling all their stakes in Suzuki in order to raise money while waiting for a bailout.

[uls]

Check this out...

GM came out with a youtube video...

explaining why letting the US automakers fail would be catastrophic

[ame="http://www.youtube.com/watch?v=2rfM4n1gdjM"]YouTube - The Ripple Effect of the US Auto Industry by GM[/ame]

[tidus1203]

KAPAL MUKS TALAGA MGA YAN!!!!

Don't worry GM, we won't allow the destruction of the US auto industry but at the same time its not the same GM we want. We want a new GM, an economically viable GM. Because at the current GM even if we throw in billions and billions the fact that you could not sell cars and you have a lot of legacy costs and then you have overpaid union workers. That's not a viable business model. After 6 months I assure you will be coming back again asking for new bailout.

[uls]

haha

kapal muks talaga

naglabas pa ng youtube video...

na-high blood tuloy si Tidus.

[ChevyChaser]

Check this out...

GM came out with a youtube video...

explaining why letting the US automakers fail would be catastrophic

YouTube - The Ripple Effect of the US Auto Industry by GM

HELP SUPPORT AMERICA'S WAR IN AFGHANISTAN, IRAQ AND IN THE NEAR FUTURE WITH IRAN.
JUST AS WE ALL DID SUPPORT AMERICA IN THEIR WAR AGAINST COMMUNISM IN THE KOREAN WAR, THE VIETNAM WAR (WHICH THEY EVENTUALLY GOT THEIR BUTTS KICKED) AND ALL THE OTHER WARS THEY WERE INVOLVED WITH.

IMHO, allowing the US Auto industry die down will be the best thing to happen to other countries. Think of all the oppurtunities other countries will have. European and Asian Auto industries will flourish, including subsidies and parts suppliers. WE don't have to rely on the US economy and investments instead, it'll be in reverse. America will now rely on other countries for their needs. More jobs will be created here and everywhere else so there's no need to send workers abroad.
Yes, let the US auto industry die.

ANYBODY GOT $25 BILLION IN CASH TO LEND?

[tidus1203]

The BIG3 CEO actually went to Congress today to plead their case. And at least there are still some senators who believe in free markets and believe in failure as a true viable option. Yes we will have terrible economy, high unemployment but that is temporary. Once the BIG 3 can successfully restructure and be more lean then those laid off people can be hired back again, but don't expect as a higher a salary. Wag na silang managinip na babalik yung bubble days. They will have to be smaller, less bureaucratic, and very cost conscious moving forward.

[lymar07]

IMHO, allowing the US Auto industry die down will be the best thing to happen to other countries. Think of all the oppurtunities other countries will have. European and Asian Auto industries will flourish, including subsidies and parts suppliers. WE don't have to rely on the US economy and investments instead, it'll be in reverse. America will now rely on other countries for their needs. More jobs will be created here and everywhere else so there's no need to send workers abroad.
Yes, let the US auto industry die.

ANYBODY GOT $25 BILLION IN CASH TO LEND?

i've thought about this also...well, only one way to find out - let it die