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The papers were submitted this morning, but some analysts have been expecting it for a while: GM has filed for bankruptcy. And the administration will be "temporarily nationalizing" one of the pre-eminent symbols of American manufacturing and capitalism. Coming on the heels of Chrysler's bankrupcy (and impending takeover by Fiat), what does this massive restructuring of two of the Big Three mean for the auto industry, the U.S. economy more broadly, and the new precedent for governmental intervention?
What does today's news mean to you? Do you own a GM car? Do you own GM stock?
Tagged as: car · general motors
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GM has spent years producing vehicles that they had to sell at a loss to sell them at all.
GM the parent company has brought virtually nothing to the table in a decade or more. Several of the subsidiaries have developed innovations, not enough to justify GM though.
I suspect that soon we will have Fiat a company that offered a product line that the American public rejected (sounds like GM) and the Fed’s running the failed Chrysler, and more then likely today we have achieved “Government Motors”…
Will we then have the Government leveling the playing field by giving reciprocal support to Ford, Toyota, Nissan, Hyundai, et-al? I doubt it! Is it possible for a non-Government backed company to compete with one that is being “Given” financial resources?
I fear that this is just more of the naïve economic policy, thus far producing negative results, being perpetrated by the current administration/party in power.
History both predicts and will tell.
The newest car I own is more then 10 years old. I have ZERO plans to buy ANY new car in the next 10 years. It is also a certainty that I will be buying NO new vehicles from any government subsidized/owned company; why would I pay for it twice? -
So, you are basically not going to spend your money on anything anywhere? Because, you know, tax breaks and grants are government subsidies...pretty much every company gets tax breaks and grants. I'm sure you have products in your home made by companies that receive obscene tax breaks.
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I'm not sure what exactly is naive about the current administrations economic policy? From my research it appears most credible economists agree with it. Perhaps, the current problems were largely created by economic policy you view as un-naive. It clearly can't work both ways: if economic policy is now naive, then what was it before or during the time in which these problems festered? And why didn't it work?
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Scottmill
I nave yet to hear, read, (etc) nonpartisan credible economists agree with current policies; particularly long term.
I am not a fan of naïve following corrupt. The end result is the same.
Slakr007
Your point is interesting! Clearly my position makes it difficult to participate in the debit driven consumer economy, thus as much as possible I do not. For example I have never purchased a new motor vehicle in my life, WHY? I can build better.
I am sure that I own something that fits your criteria. I however can not think of anything that I own that comes from a Government “owned” company. -
Desolation,
So, it was corrupt before? But not naive? And the corruption is what you allege created the problems, not the policies themselves? -
Cars a bit of a hobby of mine, so I wonder where you get your information on what innovations have been developed by GM subsidiaries, and that the parent company hasn't developed anything. This sounds to me like "non car-guy conventional wisdom". The type of guy who shops Camry and Accord only. I could be wrong. Magnetic ride control, for example, was invented and pioneered by GM on the Corvette and is only now being used in other makes. For example.
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Scottmill
So close.
Corruption, be it on the right and/or left in the past generated the past policies.
However I can not call the malevolence of the immediate predecessors, naïve. Nor do I excuse same. -
An additional point on government aid. A quick google search on Toyota will reveal that it has been receiving government aid from "Japan Inc". The same is true of the German manufacturers.
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Desolation,
What a convenient and naive truth you've created too support this theory! I'm not convinced. -
LOL! Well played a "Convenient Truth". I love it!
Having no need to convince, I retire to profiteering.
Scott. Thank you, have a Terrific Day!
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@ Desolation
Your absolutism about government owned/run companies is unwarranted. Do you get power or water from a municipal utility? Do you send and receive mail?
I lived in Gainesville, FL for 10 years and loved Gainesville Regional Utilities as a company...especially the way they dealt with the insane ideas that came from the mayor and city commission. Their rates are fantastic, they are very good to their employees, and their customer service is phenominal.
The Government does not "own" the Post Office anymore, but the Post Office is still at the whim of the government in many ways. And, despite all of its faults (and I know them well as both of my girlfriends parents are extremely hardworking supervisors with the Post Office), it is pretty amazing what the Post Office is able to do for the ridiculously low prices they charge. Their customer service may suck pretty much all the time, but they do get the job done as well as UPS or FedEx for a lot less.
You have never bought a new motor vehicle because you can build a better one? Really? I can't. So, I happily buy from Nissan and Honda, both of which get government subsidies. I couldn't care less knowing that my cars will run until the wheels fall off in 20 years with minimal regular maintenance. Note: Regular maintenance does not include replacing alternators and water pumps as it does with American cars.
As far as your comment to scottmil goes... If you have not heard any credible economists supporting the current policies, you have not been listening...unless, of course, you have narrowed your defintion of 'credible' to those that agree with you.
Actually, I think the past policies absolutely defined the word 'naive'. Any free-market absolutist is incredibly naive. Greenspan admitted that to Congress.
In fact, any absolutist is naive. Bush defined absolutism. Obama may be many things, but he is not an absolutist.
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I had a GM car in college and I ended up rebuilding it from the ground up because it was a piece of junk.
I do hope American auto manufacturerers will build cars that are as good or better than their German and Japanese counterparts. I will consider buying American at that point. Yes, I know American manufacturing has improved over the decades; I've owned several Mazdas which were partially built in the U.S.
I'm disappointed the government is stepping in to save corporate America's corrupt derriere. The American auto manufacturers have been teetering for decades. If American corporations are supposedly good at self regulation, why are we in the midst of the worst economic depression in recent memory?
Governments and corporations that are too big to fail are scary. I don't like that tax payers are bailing out poorly run corporations. I hope American corporations reduce and restructure their pay to executives and shareholders in favor of employees who are always asked to pay the sacrifice at the first signs of trouble.
Let's figure out how to get rid of boom-and-bust economic growth so regular people can keep their mortgages and provide for their families consistenly.
We are stupid when we let every-day man's future be fraught with a paucity of that which is needed and a plethora of that which is not.
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Yes, this is something very few people are talking about. No one is addressing one of the underlying problems of our economic system: we allow companies like GM to exist.
Even the most staunch free-market people support companies like GM even though they are basically anti-capitalistic and dangerous.
Why anyone thinks having three companies owning almost all of the domestic car brands is a better idea than having 15 different car companies competing against each other is beyond me.
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Well said!
While I would love to be able to support American designed and made products, the companies providing them spent so much time lobbying congress and building monopolies that they forgot about their product. As a result they became too big and slow moving to support their own growth or focus on innovation.
Perhaps this is the sign we needed that monopolies are dangerous, too many acquisitions create a mess for management and any resulting business model(s).
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It's already a fact that GM vehicles are already and for the most part, always have been more reliable than German cars. And the statistics show that they have caught up to the Japanese manufacturers for the last several years. The issue isn't product quality anymore. The issue is no longer compelling product and overcoming negative perceptions.
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Three weeks ago, I bought my second Japanese car and felt no remorse for doing it. There is simply no innovation in American cars. They are second rate. New innovations and technology trickle down from the Japanese and the Germans and end up cheaply and poorly implemented in American cars.
It is fine to have second-rate, cheaper cars. They have a place. But, you cannot expect sustainability when three companies buy up all of the brands and then rely on nationalism ("BUY AMERICAN!") rather than competition and innovation to sell cars.
It is really sad that my girlfriend has been asking Acura and Lexus about the reliability of their sunroofs because Saturn has replaced the sunroof in her car twice and it is still completely inoperable. A sunroof. A decades old technology that should be reliable even on the cheap end.
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Anecdotes are worthless slakr007. You need to look at real statistics. If it's a battle of the anecdotes, my current Honda is the least reliable vehicle I've ever owned, and the only Japanese car I've ever owned (made in Japan). Do I claim that Hondas are not reliable? No, I don't. The AC in the Honda has been replaced 3 times. None of my domestic cars ever needed the AC replaced. Gosh, this "decades old technology" ought to work wouldn't you think?
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Wait !!
The dealer buys the car from the manufactuer at (or very close to) manufacturing cost. When the car is sold, the dealer and the manufacturer split the profits (the split is determined by the franchise agreement).
When there are too many dealers, the price is depressed and therefor the profit that goes to the manufacturer is depressed
Your guest is only telling part of the story !!!
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Bob Thomas is a good company and it is just absolutely outrageous that so many good companies have been destroyed by this Conservative Republican caused Re-Depression! GI Joes, Gottschalks, so many small businesses have been ruined.
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The thing about the auto industries is that they are big manufacturers of military defense vehicles and we Americans need to keep that manufacturing capacity as a matter of national security.
That said, I would like to see them build cars that people want to buy instead of cars that they want to sell, let's remind ourselves that in the 1990s Conservative Republicans pushed through legislation giving huge tax breaks to people who bought cars over some 5,000 pounds, essentially luxury SUVs with huge profit margins. So people who wanted to buy smaller fuel efficient cars could not afford to give up those tax breaks. Conservatives gripe about government interference in business but that is exactly what they did with those tax breaks, they influenced the markets! Hypocrites!
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Quality, isn't just reliability and performance. Many people don't like the aesthetics of GM cars. I think the importance of the aesthetic quality of cars is often understated. I think much of the decline was because of bad style.
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Scotmil, that is my point about GM not producing "product" that people like. If we stick to the facts only, this is what we know about GM:
1) GM quality, reliability, and longevity are equal or better than German and Japanese makers. Buick ranks highest above the statistical dead heat with Lexus.
2) The public, for the most part, doesn't know this.
3) GM has missed the mark with building product that people want (apart from the extremely popular large SUV's)
4) GM is now, call it too little too late, finally offering product that is attractive to traditional foreign car buyers. Unfortunately, there are only a few of these models out of the 140 or so models they sell.
5) The junker you bought for 400 dollars in college with 200k miles and questionable service history should not be compared to a brand new Honda.
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fatmidwesternwhiteguy,
I agree with most of those points. However, my issue is still one of aesthetics. I took a look at the GM sites (to double-check) and I still think the aesthetics (not range of cars or models) are not up to snuff, even of their current cars. Obviously, aesthetics are generally a matter of personal opinion or taste, so there isn't much to discuss other then to state my preferences, so: I think the overall aesthetics and details of most GM vehicles are inferior to many other brands. (Excluding SAAB----which hardly counts.) I am probably in a minority on this, but the aesthetics of Japanese cars (even Lexus) is not at the level you find in German cars. I think the quality/reliability issues are somewhat overplayed in the downfall of American cars, I think the design/style issues are equally as important, if not more so----I'm not just talking about the model types (small cars to SUVs) but the aesthetics of all their vehicles.GM probably could have had the same size cars, and perhaps if they looked better, they would have encountered less problems.
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I'm surprised that not a word is spoken of how GM went out of it's way to destroy the Superb EV1 All Electric Vehicle it created and leased in 1998. California put out a mandate in 1990 that all car dealers had to sell a certain percentage per year of 0 emission vehicles. Stan Ovshinsky, a brilliant physicist and visionary who led the way with solar and battery technology sold GM his battery technology, which Chevron bought and buried. The point is, The OIL GIANT along with the American Auto Giants refused to cooperate and once again out of Denial and "Controlling Monopolized Interest" we are not prepared to face the greatest crisis of all, Environmental and Economic Disaster. With the current Global energy demands and technological potential we could be driving solarized electric vehicles today that could get 120-300 miles/charge. We have made light year advancements with space technology and electronics to still be pecking around for prehistoric fossil fuels for our growing "energy demands". Every other solution is only a temporary compromise of which we are rapidly running out of time and money to make the very best decisions. Proactive behavior is far less costly than reactive urgency. With the evolutionary process, what was once strong and alive must die in order for a fresh progressive vision to take the lead. The time has come to cut the "life support" aid from this outdated monopoly to allow fresh innovation to take it's place. As always, we must have collective faith if we are to survive this global/planetary paradigm shift.
Loretta Huston Mon. June 1st 2009
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Comments are now closed.
I would love to see GM be a successful business again. It has been frustrating to watch the company miss the mark from a product perspective for all 41 years of my life. Even as their quality improved to be equal or better than the foreign competitors, the product itself missed the mark and continued to lose market. Now that they finally have interesting product in some segments, they've burned through the good will they once had. The few GM loyalists left are not enough to support the size and number of brands that GM had in their glory days.
As a smaller company without the legacy baggage that may have been realistic for the company with the market share it had 40 years ago, they will be able to focus on making a few cars well instead of the 130 plus confusing models they offer now.