Not the best news in the world. I'm actually surprised that GM's in bigger trouble than Ford.

Quote:

Reuters
Merrill says GM bankruptcy possible
Wednesday July 2, 12:42 pm ET
By Soyoung Kim


DETROIT (Reuters) - General Motors Corp (NYSE:GM - News) will need to raise as much as $15 billion in cash to shore up liquidity and bankruptcy is "not impossible" if the U.S. auto market continues to slump, Merrill Lynch said.

Other analysts have suggested GM, whose shares fell to a new 54-year low on Wednesday, needs to raise funds to ride out the downturn in the U.S. auto market through 2009.

But Merrill's estimate of GM's financing needs is the highest yet. It also carried the most stark warning of the bankruptcy risk for the largest U.S. automaker.

GM declined to comment directly on the Merrill Lynch report but it believes it has sufficient liquidity for 2008 despite lower volumes and could take more steps to cut costs if sales conditions worsen.

"If conditions continue to deteriorate, we would consider other operating measures," GM spokeswoman Renee Rashid-Merem told Reuters.

Merrill Lynch analyst John Murphy cut GM to "underperform" from "buy" and lowered his price target for the largest U.S. automaker to $7 from $28. Shares fell as much as 11 percent to $10.50 in Wednesday's trading in the New York Stock Exchange. The cost to insure GM's debt rose.

Murphy also lowered his forecast for 2008 U.S. industry-wide light vehicle sales for the third time this year and said the recent drastic decline in sales would likely to continue through 2009.

Murphy forecasts light vehicle sales of 14.3 million units this year and 14 million units for next year. That compares with 16.15 million units in 2007 and is sharply lower than the current forecast of most major automakers, including GM.

"The recent extreme deterioration in volume and mix is driving much higher cash burn and eroding GM's cash position," Murphy said. "We believe $15 billion is necessary because there is downside risk to our current estimates and a greater cushion is essential."

Any capital GM raises has the potential to dilute equity if it's done through convertible offering or the issuance of additional equity, both possibilities analysts have raised.

DEEPER DOWNTURN AHEAD?

The deepening concerns about the sales outlook for GM come after a June sales report that showed industry-wide auto sales dropping to a 15-year low.

GM's own sales fell by a narrower-than-expected 8 percent on an adjusted basis after the automaker offered zero-percent financing for six years.

But Deutsche Bank analyst Rod Lache said GM could see a "payback" from its June sale in coming months, with its U.S. market share dropping back below 20 percent from 22 percent in June as sales fall back.

Several other Wall Street banks including Citigroup also downgraded automakers and parts suppliers on Wednesday and lowered their outlook for U.S. auto sales this year and next.

Citigroup analyst Itay Michaeli lowered his forecast for 2008 U.S. vehicle sales to 14.5 million units from 15 million, saying plummeting resale values of trucks and SUVs was crimping demand already hurt by weak housing and tighter credit.

Itay said a full recovery in the U.S. auto market would begin only in 2010 or 2011.

Michaeli said GM has to weather the current downturn with considerably less backup liquidity than smaller rival Ford Motor Co (NYSE:F - News), which tapped the leveraged loan market at its peak in late 2006 to raise $23 billion.

"While we do not believe GM is facing an immediate cash crunch, the urgency to shore up liquidity to navigate through a difficult 2008-2009 has risen significantly in recent months," Michaeli said. He cut GM's target price to $14 from $21.

Industry tracking firm Global Insight cut its forecast for the annualized sales rate in July to 14.4 million units and cut its 2009 forecast to 14.2 million units in sales, citing the risk of higher average oil prices in the months ahead.

Credit option contracts on the Chicago Board Options Exchange that would pay out if GM or Ford default before September 2012 ticked higher. The contracts, which remain lightly traded, point to a roughly 73-percent default risk for GM and a 69-percent risk for Ford over that period.

Something tells me the US Government would not allow:
- A major Military contractor and supplier since World War II,
- The second largest employer in the US

To go completely bankrupt, especially if they brought Chrysler back from the brink in far harder times.

You're right, but I do think this may hasten GM's partitioning. As for the government, they may not care if GM is a big defense contractor. Remember AM/General? That used to be a part of American Motors/Jeep. Once AMC was bought out by Renault, they just forced AMC to sell off AM/General to General Motors. Same thing may happen again. We may see American General become a standalone company, which would actually be the best thing for it.

I'm also thinking that we may want to say Bye Bye to Buick and Hummer, Saab too probably. And that Chevrolet trucks may dissapear so Chevy's MPG averages can go up. They're going to have to do a lot of belt tightening, or else go under.

Chevy Trucks won't go away, if there's a reason that GM is even functioning now, it's because of fleet purchasing of Chevy Pickups, Suburbans and Medium Duty vehicles. I can see GMC focusing solely on commercial vehicles as well.

Hummer, it's dead. Unless they can bring the H1's back with a Turbo Diesel, the marque is gone. AMGeneral and Chevy are huge suppliers to the military in the US and Canada.

Buick, I can see it staying around mainly because they're HUGE in China along with Cadillac. Saab is pretty big in Europe, and their cars aren't terrible in the efficiency department. If anyone is going to keep GM afloat, I hate to say it but it'll be Opel. Smaller cars, alternative fuels.... and electric cars... that will be GM's salvation.

Yeah Hummer should be canceled today, Buick although popular elsewhere is almost useless in the U.S. I say cancel the badge engineered models and focus on 2 strong cars, roll them into Pontiac and make Buick a model not a brand...kinda how they started to begin with.

GM needs to realize it's time to stop wasting money repeating themselves, the don't need 15 versions of the same truck, or SUV, or Car. This is what is killing them. They need to cancel GMC by the end of this year and only use the brand as heavy duty commercial trucks, no more Chevy truck clones. Cancel the Traverse and transfer the far better looking GMC Acadia and badge it as a Chevy.

Cancel the slow selling Cadillac SRX and replace it with the Buick Enclave...Cadillac ECX???

They need to start being more pro active with the market, Turbo Cobalt? the Cobalt should have been a turbo when it first came out. Saturn Astra? That car should have been the Ion. V8 Impala SS? it should have always been that way. GM needs to start listening to the customer and what they want and stop assuming we all just want big a$$ trucks and SUV's

No more Hummer today
No more GMC by the end of 2008
Scale back or cancel Buick.
Scale back all Truck production, bump up car production.
Stop introducing a new SUV every month, start spending that money on efficent (sp) technologies

Forget Diesel, it sounds like a good idea but the fuel is way to over priced, it's not as good an idea as it sounds. Concentrate on Hybrid technology. Perfect Cylinder cancellation technology for trucks. It's just time GM gets their heads out of their as*es, they need to think like Honda and Toyota used to think in the 80's and 90's....just bulid better cars with a great price.



"Formerly known as Jammit - JBO member since 1998" JBOM | CSS.net

I totally agree about Buick and Saab. I think Buick should become a Chinese company and Saab should be sold exclusively in Europe. True, the fleet buyers keep GM afloat, but they should make GMC the fleet brand. That way they can get rid of superfluous vehicles. Jooky's right. What's killing them is introducing a bunch of models that just eat away the sales of other GM cars. They need to make cars that will eat away the sales of Toyota and Honda.

Here is my plan to start shaving GM products...

Chevrolet-
Keep-Corvette, Cobalt, Aveo, Malibu, Trucks
Kill- Impala, HHR, Avalanche
Maybe- Vans, Equinox
Reason: Impala is slightly larger than the Malibu? Malibu looks better and better able to compete, larger models can be in other brands, Vans good for mass sales, Equinox maybe, could be other brands too, Avalanche=dumb

Pontiac
Keep- G5, G6, G8, Solstice
Kill- Vibe, Torrent, Grand Prix
Reason: No need for Pontiac SUV or 5 door wagon thingy, its a Toyota anyways, and Grand Prix, just have them upgrade to G8, or down to G6, or over to another brand

GMC
Keep- Nothing
Kill- Everything
Reason: No need for multiple brands of trucks, especially one that is trucks only

Cadillac
Keep- CTS, STS, All V- Models
Kill-Escalade, EXV, EXT, SRX Crossover, XLR
Maybe- DTS
Reason: CTS and STS are larger sedans, V- series to promote top branding, only have XLR-V, less competition for Corvette, DO NOT NEED $60,000 SUV! Maybe DTS for all the old folks out there...but only maybe and in limited quantities

Buick-
Keep-Enclave, LeCross, Lucurne
Kill-None
Reason: Already trimmed the fat, maybe reduce production, Instead of multiple smaller SUV's maybe just keep Chevy and Buick versions,

Saab-
Keep-9-3, 9-5, TurboX
Kill- 9-7
Reason: 9-3 and 9-5, and turbox for that matter sell in limited quanties, and is popular in Europe, plus lots of good developments on the Saab side, but again, no need for SUV from Saab

Saturn-
Keep-Astra, Aura, Sky, Vue
Kill-Outlook
Reason: Make Saturn back to what it once was, el chepo, but make them with class and style, something to compete with Toyota and Honda, the improvements from the Opel end have really helped, especially in the visuals department

Hummer
Keep-Nothing
Kill-It all
Reason: No need for ungodly huge SUV's anymore...maybe make limited production models, but no more mass marketing


Just some of my ideas per brand...just a lot of trimming, maybe merging of models together...something to help GM from bleeding cash like this

Quote:

Chevrolet-
Kill- Impala

Would NEVER happen. Impala = rental fleet, police, taxi & business fleet purchases. GM would still make a decent profit from bulk sales.

Quote:

Chevrolet-
Maybe - Vans

Less likely to happen than killing the Impala. Vans = Industrial sales.

Quote:

Chevrolet-
Keep-Cobalt, Aveo

IMO, they should keep one or the other.

What is 75% of the motivation for buying a Cobalt? Cheap car that's good on gas. 20% buy it because it offers a bigger 4-door than the Aveo, 5% buy it for "sportiness".

What is 100% of the motivation for buying an Aveo? Cheap car that's good on gas. 75% of the people that would buy a Cobalt would likely consider the Aveo if the Cobalt wasn't available. For the other 20%? Make a cheap, stripped down Malibu sedan. The 5% that want sport? This way to the Pontiac dealer.....

Quote:

Cadillac
Kill-Escalade

Rick Waggoner would rather face castration via Richard Simmons' teeth. Big SUVs will still be around, but they won't be the #1 option for family hauling anymore. And as long as they're cranking out Suburbans, they'll be slapping some bling-blang on them and calling them a Cadillac.......and cranking the profit margin 20% in the process.

Quote:

Cadillac
Maybe - DTS

It'll be dead in 5 years anyway....along with most of its current target market.

Quote:

Hummer
Keep-Nothing

Preach on, brotha.

Well, unless they wanted to go back to the way they were before. 15 dealerships across the country, offering the H1 with only one option....gas or diesel.



The biggest thing GM needs to do (for North America anyway) is define their products and kill off at least one "marque". The only clear product differentiation they have is that Cadillac is at the top, representing performance-oriented luxury, and that Chevrolet is at the bottom, representing value. Pontiac, Buick, Saturn and Saab are all kinda-sporty, kinda-luxury, kinda-value.....and a whole lot of nothing at the same time. Saturn is supposed to be a value brand, but presents vehicles that are equal in terms of sport to Pontiac (Aura/G6), but their most value minded car is more luxurious (in a relative sense) to Chevrolet's (Astra/Aveo). Same case with Buick. Buick in North America is where Oldsmobile was 10 years ago. Not as luxurious as Cadillac, not as sporty as Pontiac, not as economical as Saturn/Chevrolet.

GM should exist on 4 levels:

Chevrolet - basic, value-minded transportation/industrial. Product line - Aveo, Malibu, Impala, Equinox, Colorado, C/K Trucks, Big Vans, Suburban or Tahoe (both aren't needed)
Buick - "middle class" transportation. Product line - Saturn Aura, Lucerne, Saturn Vue, Enclave
Pontiac - performance. Product Line - Saturn Astra w/Cobalt SS-eque model, G6, G8, Solstice
Cadillac - performance luxury. Product Line - CTS, STS, XLR, Escalade

And no, I didn't forget; the Corvette isn't under the Chevrolet brand. Make it it's own project; hell, it is anyway. They're built in one plant to their own design specs and likely to its own budget. Make it available at select dealers across the country.

If you want it in terms of segments (in ascending order within category):

Compact
Aveo
Astra

Mid-Size
Malibu
Aura
G6
CTS

Full Size
Impala
Lucerne
G8
STS

Compact Crossover
Equinox
Vue

Quote:

Big Crossover

Enclave

Big SUV
Suburban
Escalade

Roadster
Solstice
XLR

Company Halo
The "General Motors" Corvette

The Saturn and Pontiac name could be interchanged. I don't know if today or tomorrow's car buyer puts more stock in "Pontiac" or "Saturn".

Clear, precise defined products with minimal overlapping products; the only platform reproduced all 4 times is the mid-size car, which should be the bread and butter of a modern automaker anyway (Camry/Accord/Altima, etc).



1989 Z24 Convertible - Dust Covered
2006 tC - Dust Covered, but driven more

Forget the solstice, the Sky is ten times more sexy!




http://www.cardomain.com/ride/2898349

slick02eco wrote:Forget the solstice, the Sky is ten times more sexy!

True yet if you got the resources to get either one the solstice is the bang for the buck. you can get this for atleast 5,000 or more less with rebates remember saturn doesnt accept gm rebates.

I'm not going to read all that bull@!#$. All I will say is this, do you remember when they were also going bankrupt about 5 years ago? Didn't happen then, won't happen now.

Jookycola wrote:Yeah Hummer should be canceled today, Buick although popular elsewhere is almost useless in the U.S. I say cancel the badge engineered models and focus on 2 strong cars, roll them into Pontiac and make Buick a model not a brand...kinda how they started to begin with.

It's still a businessman's car. GM dumped Olds already.

Quote:

Cancel the slow selling Cadillac SRX and replace it with the Buick Enclave...Cadillac ECX???

The Enclave doesn't sell all that well to begin with.

Quote:

They need to start being more pro active with the market, Turbo Cobalt? the Cobalt should have been a turbo when it first came out. Saturn Astra? That car should have been the Ion. V8 Impala SS? it should have always been that way. GM needs to start listening to the customer and what they want and stop assuming we all just want big a$$ trucks and SUV's

Again, the V6 impala's are fleet vehicles. GM lives and dies by fleet vehicles.

Quote:

No more Hummer today
No more GMC by the end of 2008
Scale back or cancel Buick.
Scale back all Truck production, bump up car production.
Stop introducing a new SUV every month, start spending that money on efficent (sp) technologies

Good idea,
For light pickups, sure. GMC has a healthy Medium truck operation.
Why and why? Trucks are still a big portion of their market. If you mean all trucks, then just bury GM now, Light/Medium/Heavy trucks are serious cash for GM, I'd say slow down on marketing them to consumers and start focusing on commercial/fleet sales.
They're already doing that (Chevy Volt, Cylinder shut off, Hydrogen skateboard)

Quote:

Forget Diesel, it sounds like a good idea but the fuel is way to over priced, it's not as good an idea as it sounds. Concentrate on Hybrid technology. Perfect Cylinder cancellation technology for trucks. It's just time GM gets their heads out of their as*es, they need to think like Honda and Toyota used to think in the 80's and 90's....just bulid better cars with a great price.

Hybrid technology is going to be a bigger PITA than most greenies will admit: the batteries once they no longer hold a charge will cost serious dollars to replace and recycle. That's not factored in under most people's cost charts for owning a car over 8/10 years. Diesel still gives you better mileage and cleaner emissions (as EPA rated) than gasoline. Hydrogen/electric is the best way to go because it's infinitely renewable (assuming you have a solar/wind/hydro power plant providing energy).

The other thing: the better cars that Toyota and Honda manufactured were made with ultra-low wage labour. There's a reason there aren't too many Toyota/Honda plants (13/17 respectively, in comparison with GM's 108) in North America, and that's because they are not really interested in paying a union wage or creating a safe work environment for employees. .

ZlineDavid & Gam, I agree entirely,

Why can't they go back to the earlier days of auto manufacturing and have option upon option up option.

Example: The GTO was a package option on the Pontiac LeMans, so, you didn't have an entirely seperate car, just make a package for it that you pay a premium for.

Better example yet is the Mustang, options for a 1969 mustang

63A 2dr fastback

63B 2dr fastback Deluxe

63C 2dr fastback Mach 1

65A 2dr hardtop

65B 2dr hardtop Deluxe

65C 2dr hardtop bench seats

65D 2dr hardtop Deluxe bench seats

65E 2dr hardtop Grande

76A Convertible

76B Convertible Deluxe

Boss 302

Boss 429


Count the packages, twelve, 12 package options!

Options galore!

All those options and packages is what almost killed car companies in the 1970's. Think about it, the '69 Mustang you mention had 5 kinds of hardtops, 6 kinds of fastbacks and 3 kinds of convertibles, then you toss in 18 different engine and tranmission configurations, god knows how many kind of wheels, 32 different interiors, and all of a sudden you have a gajillion possible orderable cars and you need 50 wharehouses and several hours of downtime per assembly line a day to switch products. It's not profitable. The Japanese beat our ass because they had cars with one engine, two transmissions (sometimes) that came in 2 bodystyles (2 door or 4 door) and had like 6 colors available. One kind of interior (black), one or two trim levels, almost no options, and every car had the same wheels.

That's how you make a profit. Simplicity.

GM isn't going bankrupt. Crap like this is what put's the anal in analysts.

Remember how everyone thought "zomg toyota is gonna outsell GM in 2007"....didn't happen.
Then the "omg wtf toyota will outsell GM in june of 2008"...again it didn't happen.

There is a lot more of these as well where they were wrong.

deftonesfan817(martin edmonds) wrote:
Remember how everyone thought "zomg toyota is gonna outsell GM in 2007"....didn't happen.

http://www.usatoday.com/money/autos/2007-04-24-toyota-gm_N.htm

Sorry, it did happen.

Quote:

Then the "omg wtf toyota will outsell GM in june of 2008"...again it didn't happen.

Yup-> http://www.boston.com/business/articles/2008/07/01/automakers_analysts_expect_june_sales_drop/?p1=Well_MostPop_Emailed7

All automakers sold less.

GAM (The Kilted One) wrote:

deftonesfan817(martin edmonds) wrote:
Remember how everyone thought "zomg toyota is gonna outsell GM in 2007"....didn't happen.

http://www.usatoday.com/money/autos/2007-04-24-toyota-gm_N.htm

Sorry, it did happen.

Quote:

Then the "omg wtf toyota will outsell GM in june of 2008"...again it didn't happen.

Yup-> http://www.boston.com/business/articles/2008/07/01/automakers_analysts_expect_june_sales_drop/?p1=Well_MostPop_Emailed7

All automakers sold less.

2007 meaning the ENTIRE year, and yes I know almost all automakers sold less, but everyone thought Toytota was going to be the one to not see double digit sales slumps...well guess what they did.

Yes, but Toyota is making a profit and GM isn't. It's not speculation, it's just hard numbers.

Toyota's using unsafe, unfair and borderline slave-labour. If GM did the same thing, they'd be in the black no sweat... damned laws.

GAM (The Kilted One) wrote:Toyota's using unsafe, unfair and borderline slave-labour. If GM did the same thing, they'd be in the black no sweat... damned laws.

If Toyota is doing it then it has to be OK.

zero wrote:

GAM (The Kilted One) wrote:Toyota's using unsafe, unfair and borderline slave-labour. If GM did the same thing, they'd be in the black no sweat... damned laws.

If Toyota is doing it then it has to be OK.

Of course. I have 372 Honduran children working for me along side of 15 Chinese Mountain Pandas...

They're the picture of healthy work relationships.

zero wrote:

GAM (The Kilted One) wrote:Toyota's using unsafe, unfair and borderline slave-labour. If GM did the same thing, they'd be in the black no sweat... damned laws.

If Toyota is doing it then it has to be OK.

Of course. I have 372 Honduran children working for me along side of 15 Chinese Mountain Pandas...

They're the picture of a healthy workforce.

hahaah...you work with pandas...

It was an analysts way to get people to sell GM stock. several other analysts said that gm was in hard times but not likely to go bankrupt

Thrice . wrote:hahaah...you work with pandas...

no no... I OWN then pandas... and the children.