Wild Ass Rumor of the Day: Big GM Announcement Monday

by Robert Farago

November 1st, 2008 6:55 PM

wild ass rumor of the day big gm announcement monday

These are turbulent times. Over the course of the last week, we’ve watched GM PR (a.k.a. “unnamed sources”) pimp a nonsensical merger between The General and Chrysler. Then, at the eleventh hour, the “deal” was retracted without comment (thanks to the U.S. Treasury Department’s refusal to bankroll the pre-bailout orgy). As regular readers will know, Friday afternoon is the witching hour for GM’s bad news, so that the markets can chill-out before dumping yet more GM stock and downgrading GM’s credit [even further] into irrelevance. So now we have an info limbo. Will the deal go ahead anyway? If not, when will Chrysler file the resulting, inevitable Chapter 7 liquidation? Into this void some tipsters step. Deep Throat tells us GM’s putting its research and development facilities on ice– and not just to save a few bob. Nope. It appears that The General is about to kill– as in starve to death HUMMER-style– Saab and GMC. Oh, and commercial trucks. That would leave Chevrolet, Cadillac, Pontiac, Saturn and Buick. (I know: Buick?). Anyway, something’s going down on Monday. The leakage should start tomorrow.

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4 of 24 comments

DweezilSFV on Nov 02, 2008

How they can continue to gush red ink for two decades with Saab and Saturn is beyond me. GM has never made a dime from either one. Remakes Saab as Opel Sweden and Saturn as Opel US and still can't sell any cars. Saab has never cracked 140,000 sales worldwide with GM.Saturn sales keep falling even with all new product. GM just rebuilt Saturn's entire line with two cars [Astra & Sky] that lose money every time one is sold.A double loser brand.[Wasn't the 10,000 per unit loss on the Sky & Solstice reported here on TTAC?] The Astra was another "stopgap" till a NA version could be built here. That ain't gonna happen obviously.No money for it. Another of those "We have to have something to offer in the segment till the "real" small car arrives " things Even if they sell it at who knows how much of a loss. With the Astra bombing as it has at sales less than half the projected 40-50,000 units [ION did over 100,000 every year For all the slagging it's gotten it sold better than the VUE], why would GM continue this charade. Maybe the big announcement will be they've finally gotten the juevos to cut the dead weight. [And start the Christmas "red tag sale" early......]

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Eh_political on Nov 02, 2008

@ DweezilSFV : I think its time to start calling it a Christmas "toe tag sale".

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Morea on Nov 03, 2008
Matt51 : People can no longer afford new cars. Wildly overstated. People just cannot afford to buy more car than they need as they have been doing (on credit) for a generation. They will be getting out of their large SUVs and into family sedans and compact cars. Out with multiple CD changers, just listen to the AM radio. Sad, but not cataclysmic as you portray.

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Geeber on Nov 03, 2008
Dr. Lemming: Etched in the memories of Democratic leadership is the sloppy way that Bill Clinton, fresh from his 1992 presidential victory, proceeded to blow his honeymoon by quickly announcing the hotly controversial, “don’t ask, don’t tell” policy about gays in the military. If I recall correctly, he blew his honeymoon by attempting to force the military to accept gays. The blowback was so fierce that his administration came up with the "don't ask, don't tell" policy as a compromise. Matt51: The US govt since 1980 has pursued policies driving down inflation adjusted wages of most working Americans. People can no longer afford new cars. 72 month financing guarantees the car is worth less than the loan. Until incomes go up, cars can’t sell. From after World War II until the mid-1970s, the American economy boomed as the Europeans and Japanese rebuilt themselves. With very little competition, American companies were inclined to accept wage increase demands (after the appropriation amount of huffing-and-puffing for PR purposes), and pass them on to customers. This is what happened with the domestic auto industry. When four companies control well over 85 percent of the new vehicle market, and one union controls all of the labor used to build those vehicles, there isn't much incentive to keep labor costs in line. By the 1ate 1970s, foreign competition was real, and American companies had to watch labor costs. Unions, of course, weren't happy. We also discovered that the domestic companies had paid out lavish wages and benefits instead of investing in modern plants and production processes. The chickens came home to roost in the 1980s. The government policy that contributed to this was permitting free trade, although free trade has helped the economy overall while hurting certain sectors. But Americans have continually signaled that they do not want restrictions on imported goods. And people can still afford new vehicles. They just can't afford $40,000 vehicles if they have to pay for them out of income (as opposed to using home equity lines of credit).

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