GM Throws More Furniture on the Fire

Frank Williams
by Frank Williams

After divesting itself of every ancillary business from appliances to locomotives to raise operating capital, GM's started throwing the last pieces of furniture onto its cash conflagration. This past July they sold the Allison Transmission unit for $5.6b. Now The Flint Journal tells us they're getting closer to selling off their medium-duty truck line to International. Sales of the medium-duties– sold as the Chevy Kodiak, GMC TopKick and Isuzu T-Series– have been down this year. The United Auto Workers (UAW) will have to approve that sale and VP Cal Rapson says he won't go for it unless GM asks him nicely "it makes sense for Flint and the UAW." In the meantime, UAW workers at International are on strike over the planned layoff of 500 workers, which may complicate things. At the rate they're going, GM's "damaged brands" Pontiac and Buick better watch out — Chinese automakers would line-up cash-in-hand to get access to a ready-made U.S. dealer network.

Frank Williams
Frank Williams

More by Frank Williams

Join the conversation
4 of 14 comments
  • Redbarchetta Redbarchetta on Dec 05, 2007

    So if they do, I mean when they do, go into bankruptcy they will have no choice but to liquidate because all the valuable assets would have already been sold off and only the huge liabilities will be left. Is Corvette the next up forsale after this?

  • Kevin Kevin on Dec 05, 2007

    What's wrong with you people? We criticize GM incessantly for being a big, stupid, bloated, unfocused bureaucracy, yet I've noticed people come out of the woodwork to criticize every move they make to actually change and sharpen their focus. No wonder it's so hard for bureaucracies to change and reform. Give a little credit. GM figured out that they can't be both a bank and a vehicle maker and do both well, so they decided they wanted to be a vehicle maker, and they sold GMAC. Maybe now they've figured out they just want to be good at making passenger cars, instead of trying to make tonka trucks. Considering the immediate blowback from a union only interested in itself and some town that GM customers do not care at all about, I'd say that's likely a good choice. Doesn't matter if the this niche unit is profitable -- GM needs to learn how to make light vehicles for consumers, including small cars, well and profitably -- or GM WILL die.

  • Whatdoiknow1 Whatdoiknow1 on Dec 05, 2007

    Kevin : The problem with this strategy at GM is that all of this selling of assests is not really helping one bit. GM is burning cash so fast now that these moves are like throwing your food and water out of the lifeboat to save weight. GM has a big SIMPLE problem with it car business, it is just to big! Too much production and dealer network to support too few GM customers. Selling the medium truck division and Allison Transmission will NOT expand GMs marketshare in passanger cars one iota, nor will it lessen the burden of creating, building, and supporting too many products that can't find homes (owners). As a car maker GM is a seriously wounded giant in critial condition. As a comglomorate GM could have been successful. As a car maker GM appears to be willing to continue bucking the industrial trends and to make the same mistakes. 7, count them 7 passanger car divisions of which NONE are sales leaders in any category.

  • Geotpf Geotpf on Dec 05, 2007

    Actually, GM only has six passenger car divisions (Buick, Pontiac, Chevy, Caddy, Saab, Saturn). Their other two light vehicle divisions (Hummer and GMC) only sell trucks. Let's look at thier current sales figures: Everything is down except GMC and Saturn. Saturn's only up because they gave them a bunch of new product (not replacements for older models, additional models). They will be down from now on, as each new model is a sales dud (just that if you go from three vehicles to six your sales pretty much have to increase). GMC is only up because the new Acadia is selling well; subtract that, and they are also down. You'll note from that chart that thier Medium Duty truck line is already in a state of flux. Used to be, GM sold GMC, Chevy, as well as Isuzu medium duty trucks, under an arangement with Isuzu. Now, that's reversed-Isuzu sells GMC, Chevy, and Isuzu trucks, not GM. (The trucks from all three brands are similiar or the same.) And, yes, both the Topkick and Kodiak have significantly reduced sales this year over last. As for dumping some of thier brands, the shut down costs are huge, plus sales will drop by even more. Despite this, I predict they will dump Saturn at the end of it's current product lifecycle (three years or so). Saab (domestically only; they will survive in Europe) and Hummer might go away as well.