Business Week: "GM's Burning Cash Like Rubber"

business week gms burning cash like rubber

Earlier today, TTAC commentator Joe ShpoilShport asked if we had any good news. Here it is [via Business Week]: "If the company [GM] can gut it out through today's miserable car market, GM will reap billions in savings from last fall's landmark labor contract and come out a real moneymaker in about three years." Unfortunately, that's the theory. In practice… "Since last fall, its hoard has shrunk from $30 billion to less than $24 billion. And given the accelerating decline in sales of pickup trucks… one analyst figures that GM's cash pile could dwindle to $14 billion by the end of 2009. That's not much more than GM needs monthly to buy the parts and materials to keep its assembly lines rolling." Our spies tell us GM's set to top-up its cash hoard by $10b– which would raises its debt to $50b. Yes, GM owes $40b. It pays $3b a year in interest. BW floats the "Delphi strategy" (mooted here previously): hive-off GM's international ops and throw NA into C11. Meanwhile, in the magic year 2010, GM will have to pay $4.7b into its union's $37.5b health care VEBA. "Company insiders say GM might get the union to agree to let them pay its bill at a later date." And if you believe that, you'll believe that COO Frederick A. "Fritz" Henderson's contention that GM will learn to "generate bigger profits on smaller vehicles."

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  • Oboylepr Oboylepr on Jun 15, 2008
    XCSC Do you have a problem with fit and finish on the Malibu?The experts rate it as world class,maybe you have some inside info you could share with us? I got a first time look at one today in a local parking lot and I gotta say the fit and finish is as good as anything from Japan or Germany. It was hard to fault it. I did not see the interior so I cannot comment there. Why did it take GM so long to get there. problem now is, it's almost too late.

  • RedStapler RedStapler on Jun 16, 2008

    My understanding of the delays on the Corolla was that when the new Civic came out last year Toyota realized the bar had been significantly raised and had to make changes.

  • Seth L Seth L on Jun 16, 2008

    The Kappa platform has been on-and-off as well. And selling imported Opels at a loss can't be good either.

  • Chris Haak Chris Haak on Jun 16, 2008
    RedStapler : My understanding of the delays on the Corolla was that when the new Civic came out last year Toyota realized the bar had been significantly raised and had to make changes. I think that had been the assumption originally, but Toyota denied that was the reason behind the delay. They attributed it to wanting to get the quality right and taking a bit more of a deliberate approach to the 'Rolla's development to avoid some of the first year teething problems that the Tundra and Camry have had.

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