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