The government is acting as if GM’s main problem is that it stubbornly refused to enter the lucrative market for small, fuel-efficient cars. But the market for small, fuel efficient cars is not lucrative–they’re the cars with the thinnest margins. And no one’s making it up on volume, either: at the height of last year’s oil spike, when barrels of Brent Crude were being quoted in first-born sons, small cars soared to … 20% of the American market.
Things I've Tagged ‘GM’
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In the end, even $19.4 billion in federal help wasn’t enough to keep the nation’s largest automaker out of bankruptcy. The government will pour another $30 billion into GM to fund operations during its reorganization. Taxpayers will end up with a 60% stake in GM, with the union, its creditors and federal and provincial governments in Canada owning the remainder of the company.
Any way you look at it, this is terrible news. Bankruptcy may be the best option that GM has for a turn around, but government ownership, or union ownership for that matter, will mean certain failure in the end. Unions, arrogance, and incompetence have killed the American auto industry. May she rest in peace.
Not quite what I thought it would be, bankruptcy of the big three could save them if handled well.