The irony of General Motors

By Lou Ann Hammond

For awhile now analysts have been concerned about the liquidity of General Motors. General Motors would say that they had enough cash. Finally they admitted that they only had enough cash to last them to the end of 2008.

Last week General Motors announced a plan to keep them solvent through 2009. Rick Wagoner, CEO, General Motors got up and gave the run-down of cuts: GM will cut more salaried employees, cut dividends for common stock, cut health care for retirees, cut back on marketing, suspend bonuses for executives, cut truck capacity, and sell off more assets.

Some people are watching with what I would call glee at GM’s financial problems. I will give it to you that General Motors management has made some big missteps over the years that have caused the stock to be at a 50-year low. But to want a company to disappear doesn’t sit well with me. There are good hardworking people in that corporation. I know that the intelligent ones working on the advanced technologies will find another job, but there will be collateral damage involved if General Motors goes under. This is not a time to be happy.

General Motors says that they will “Bolster Liquidity by $15 Billion through 2009”. Wagoner said that they used the worst case scenario to make sure they had the numbers. Let’s hope things get better because the advanced technology, such as the Chevy Volt, isn’t supposed to come out till sometime in 2010. It would be a sad irony indeed IF the Volt cannot come to fruition before GM folds or goes private or is bought.

The irony of General Motors is that they are doing very well in China. General Motors has the number one selling vehicle in China, the Wuling minivan. Eighty percent of GM’s cars sold in China are 4-cylinders.

In April, 2008, General Motors Corp. Chairman and CEO Rick Wagoner participated in the opening of the China Automotive Energy Research Center (CAERC) at Tsinghua University in Beijing. This University will help the government create an energy policy for China, something America doesn’t have.

For the people that are gleeful that General Motors could be getting their just desserts, for those people that think General Motors has been way too arrogant, let me remind you that the automobile manufacturers that are currently doing business in the United States don’t need to buy GM for their manufacturing or for the dealership/distribution services or for their credit arm.

Nissan expressed interest in General Motors, via major stockholder Kirk Kerkorian, a couple of years ago, and in a Wall Street Journal article July 22, 2008 Ghosn was quoted as saying, “We are heading into a global slowdown, It’s almost a perfect storm.” WSJ said Mr. Ghosn said the global slump could prompt auto makers to seek more alliances or possibly mergers. “I think there will be consolidation.” Kerkorian is starting to look like a soothsayer, predicting the future before it occurs. One wonders what General Motors would look like now if they had merged when Kerkorian tried to force them to do so.

The one group that could use the most of the assets that General Motors possesses would be a Chinese automobile company. The irony is that General Motors already has a lot of experience working with their Chinese partner, Shanghai Auto (SAIC). That’s working with, not for.

About the Author:

Lou Ann Hammond is the CEO of Carlist and Driving the Nation. She is the co-host of Real Wheels Washington Post carchat every Friday morning and is the Automotive, energy correspondent for The John Batchelor Show and a Contributor to Automotive Electronics magazine headquartered in Korea. Hammond is a member of the North American Car and Truck of the Year (NACTOY), Women's World Car of the Year (WWCOTY), and the Concept Car of the Year.