When GM reported on Friday they had lost $4.2 billion, and were well on the way to running out of cash, the news was far worse than most experts had predicted. Still, GM is ruling out filing for bankruptcy. My guess is that a government bail out of GM is more likely. It is a lousy situation, and as an American taxpayer, I don’t want to have to pay money to compensate for GM’s mistakes. 

At The Garage, we are not politicos, and we are not business experts either, but with these stories making headlines, it is tough to ignore. We are car guys, and we care about what’s in the showroom. CNN did a report on all the major projects GM has in progress, and if any of them will be delayed. Here’s the rundown:

Chevy Volt

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For the second time this year, Volvo has announced mass lay-offs to the tune of 6,000 employees worldwide. This news follows a staggering sales drop for September-the By the Numbers sales report shows an ulcer inducing 51.8% sales drop from the year before. Noted, all manufacturers posted sales losses, but Volvo’s loss was second only to Hummer. 

So, what happened here? Famous for making boxy, safe and sturdy sedans and wagons, Volvo enjoyed a fiercely loyal group of buyers. For the enthusiast, Volvo started offering turbocharged versions of its cars in 1981. With the 1993 introduction of the front-wheel drive 850, Volvo started moving away slightly from its boxy design style in an effort to lure buyers from Saab, Mercedes, Audi and BMW. This move angered many hard-core Volvo fans, but did pay off in sales increases. In 1998, Volvo released the XC70 Cross Country-a V70 wagon with a turbocharged engine, all-wheel drive, a macho look, and increased ride height. The car was a success, and in 1999, Ford Motor Company purchased Volvo. 
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13 car dealerships in 6 states
2700 employees
2007 revenues: $2.13 Billion
Number 13 on the Automotive News Top 125 U.S. dealer groups.

The doors are closed.

There was a time when working for a large dealer group was safe. There was a time when the top selling Chevrolet store (or group of stores) would have been untouchable. These are different times.

Bill Heard Enterprises apparently notified dealer General Managers at 2 pm yesterday that their stores would be closing. High fuel prices, canceled floorplan financing from GMAC, lagging truck sales, the national economy and local market challenges are all being blamed for the closures. Stories are being told of service departments calling customers to get their cars out and new car customers arriving to take delivery, only to be handed the keys to their trade in. Some stores are already gated.

The big winners in all of this must be neighboring dealers, who will be able to pick up on substantial service business, not to mention new and used car sales. For once, finding technicians to fill the gaps should prove easy.

This should be a pretty hefty wake up call to the rest of the auto industry!

Source Automotive News

Instead of having bloated inventories sitting in their yards that beg for consumer incentives to help turn on the ignition keys to move them, Detroit might be taking a new tack in 2008. With the “R” word projecting in the minds of many sleepless execs; it appears production cuts may replace incentives in 2008.

If the market continues to sag, and recession looks like it may become imminent, incentive won’t go away totally, but if dynamics warrant, look for less cars coming off the line to maintain internal costs, stablize prices and lighten inventories.