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
The most important new car GM will introduce, we can expect to see the Volt on schedule. Given the high development costs, this will not be a money maker at first, but this is an extremely important car to GM.
Chevy Cruze
The Chevy Cruze will also come out on schedule. The current Cobalt has been with us since 2005, but the Cruze appears to be an enormous improvement. It would seem that GM learned their lesson by letting the Cavalier soldier on, on….and on. The Cobalt was a better car, but Civic and Corolla buyers paid little attention. I expect that to change with the Cruze.
Chevy Camaro
The Camaro is done, so no need to postpone this intro. Still, the new Camaro may hold a record for the longest, most drawn out new car introduction we’ve seen. Ever. This is hardly a time when the world needs a new muscle car, however. Early road test reports are promising though, and this Camaro may be the best driver from the Mustang/Challenger competition.
Chevy Equinox
The replacement for the basic Tracker, the Equinox has been with us since 2005, and development is well under way on a replacement. Crossovers remain a popular choice for families, and GM continues to give the green light on this car. The Equinox’s sister, the Pontiac Torrent, will not return once production ceases on the current generation of vehicles.
Cadillac SRX
With us since 2004, the SRX is due for a makeover. Another green light from the General, we can expect a slightly smaller SRX in the future.
Cadillac CTS Wagon
This was not a costly job for GM, so no need to postpone the CTS Wagon. We did report a possible delay in the CTS Coupe, but CNN reports that car will come on schedule as well.
Those are the go-aheads, but what is being delayed? The Saturn Vue plug-in. All resources are dedicated to the Volt, so the Vue can wait. It may be until 2013 until we see a new Malibu. New versions of the Yukon, Tahoe, and Avalanche have been postponed, indefinitely. For reasons that are pretty obvious. The future of the Escalade is uncertain. It could continue on its current platform with its Yukon/Tahoe siblings, or go smaller. That sound you hear are pro athletes and hip hop artists crying in pain at the thought of a smaller ‘Sclade.
So, the bottom line is that thee is no shocking news here, but as I said, most of the cars about to come out are already done, and ready for sale. My only concern is a delay in the Malibu. Chevy has a true contender for the Camry/Accord/Altima, but in that market, it takes constant development and improvement to stay in the game. By 2012, all three will have completely new designs, and by then the Malibu will be a dinosaur. Not a risk I would want to take.
4 comments ↓
For all intents Wagoner made it clear that GM is almost out of money, staring into the abyss, desperately waiting for a bailout.
It will be interesting to see who will continue to buy vehicles from a “near bankrupt” manufacturer.
Cruze looks like an Audi… Shame.
As for the sports cars, I maintain there will always be a place for one. They are almost an island. If you can afford one, you buy one.
And I dare the Canadian Gov to help out, dare them!
Survival of the fittest. You don’t make it through a economical down turn by being cavalier with your company.
Deutsche Bank: GM Target Price $0
General Motors can’t catch a break. After writing a glowing piece on GM’s prospects in the spring, financial newspaper Barron’s has reversed course, telling investors to get out while they can. It also told investors to ditch GM bonds.
Deutsche Bank joined the fray, moving GM from “hold” to “sell” and putting its target price on the carmaker at zero. GM closed Friday at $4.36 and traded pre-market Monday well under $4.
The German investment bank says that the U.S. auto giant will have to rely on a government intervention to stay alive, but even if that were to happen shareholders would be left holding the bag.
If the government doesn’t step in, Deutsche Bank told investors, collapse is inevitable and would precipitate systemic risk affecting other automakers, suppliers, retailers, and parts of the U.S. economy.
GM is fighting for its life. CEO Rick Wagoner went on the financial news shows on Friday during the trading day and went so far as to compare GM to Lehman Brothers, the bank which Treasury Secretary Henry Paulson decided not to rescue, and whose subsequent collapse has been blamed for the worst of the credit crisis so far.
If GM does file bankruptcy, a similar, Lehman-like ripple effect would result, Wagoner warned.
At minimum, bankruptcy would scare off the customers GM has left. “You can’t sell cars to people under those circumstances,” Rick Wagoner told CNBC.
Auto industry in severly hit by the global crisis and it seems GM is sitting on the driving seat leading to global auto crisis. In every country they are standing in a queue infront of respective governments asking for the rescue packages…strange! where all of there money have gone?… http://www.wheelsontrack.com
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