GM Posts a $30.9 billion loss in 2008
Troubled automaker GM says it will need another 16.6 billion US dollars in order to remain solvent
By Alex Ricciuti
February 26, 2009 8:56 PM
Filed Under: American, Corporate/Financial, General Motors, Industry
There's no hiding the terrible news and what that may mean for GM - namely, that it's game over for the Detroit automaker.
GM lost over 30 billion US dollars in 2008.
That's 30.9 billion to be exact which makes the 13.4 billion the automaker has received in a federal bailout seem rather skimpy in comparison. GM claims it will need a further 16.6 billion in funds in order to stay solvent. But if one puts those two bailout figures together they come pretty close to that 31 billion lost in 2008. It doesn't look good politically for GM if they seem to be asking for taxpayer dollars to cover their colossal losses.
GM is attempting to restructure and must submit plans that show its long-term viability to the federal government by March 31st in order to qualify for any more money in the form of emergency, low-interest loans from the US Treasury.
GM has committed to eliminating or drastically shrinking four of its brands - Saab, Saturn, Hummer and Pontiac. The automaker also plans to cut 47,000 jobs in 2009 and shut 14 plants in the next 3 years.
Still, all that may not be enough. Sales are still dismal for GM brands and things don't look like they will be turning around any time soon. In a speech to Congress earlier this week, US President Barack Obama said that his administration would not protect automakers from their bad choices. Hinting heavily that there would not be an endless series of bailouts for GM.
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Comments
What happens now with GM and Chrysler is not the result of the crisis, but the result of the bad management and the low quality of the cars they produced in recent years. The crisis only deepened their problems.
In Europe, few people heard of Chrysler. The most well-known and appreciated American car is the European Ford. Opel is also known in Europe, but is considered as a lower quality car compared to other popular brands produced in Germany: Ford and Volkswagen. And Chevy is seen as being nothing else but a cheap Opel.
There comes a time though that enough is enough with the bailouts, and thats fast approaching. The argument thats its cheaper to keeping GM afloat than have the combined cost of putting all employees and suppliers on handouts plus the loss of their spending and tax, is a weak one. In a market with a largely constant demand for new vehicles, a loss of a major player will cause supply to drop back below demand, causing other maunfacturers to have increased sales, hence requiring other manufacturers to boost their production. So the potential loss of employment is partially mitigated by the subsequent increase in demand for other manufacturers. Given that the suppliers are all interconnected, that increase from other manufacturers will cancel out the loss of GM part orders.
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GOOD! seriously...no offense to the workers... i feel their pain, but the company is seriously pathetic and should go down right now. horrible cars, high ego, and didn't spend money in areas of need.