A General Motors' second bailout could sting

CNN Money ^ | 10/26/2012 | Doron Levin

[SeekAndFind]

Not in America, but in Europe. The company's alliance with Peugeot is struggling — and that means intervention by the French government.

A grim situation for global automakers selling cars in Europe is growing worse.

Now the two biggest Detroit-based automakers are undertaking drastic cost-cutting measures to stem massive losses. General Motors Co. (GM) is joining forces with PSA/Peugeot-Citroen to split the cost of developing new models for GM's Opel and Vauxhall brands on the continent. Ford Motor Co. (F) is shutting its under-utilized Belgian assembly plant in Genk. Ford will juggle production among its plant in Valencia, Spain and Sarlouis, Germany.

GM's move comes as financially ailing Peugeot has secured a rescue from the French government. France will guarantee $9 billion worth of new Peugeot bonds in return for greater influence over the automaker's operations. Without France's intervention, analysts say, Peugeot faces insolvency -- and GM would lose in its latest bid to stanch losses on the continent, which have totaled about $12 billion over the past decade. GM is Peugeot's second-biggest shareholder, under terms of an alliance forged earlier this year.

[SeekAndFind]

According to the article:

GM, which filed for bankruptcy in 2009, is 25% owned by the U.S.

Although the automaker’s finances are strong, its difficulties with Opel/Vauxhall are a drag on the company and its stock, which is trading at roughly two-third’s its 2010 offering price.

Privately, GM executives are anxious to sever the company’s connection with the U.S. Treasury. GM wants to end the appearance of government oversight of business decisions; and the automaker is rankled by the stated bias of some consumers against GM vehicles due to government aid in 2009.

[STYRO]

“...to split the cost of developing new models...”
How about putting those new models on hold and getting the company solvent? Do they really need to develop new models if the market is crashing?

[Opinionated Blowhard]

There is a reason bankruptcy has a Chapter 7 (liquidation) and Chapter 11 (reorganization). GM should have gone through a Chapter 11 reorganization 4 years ago. All the bailout did was keep the high cost structure in place and a new bankruptcy or bailout was destined to happen.

[Hemingway's Ghost]

Do they really need to develop new models if the market is crashing?

Absolutely. The reason they're performing so miserably is because they're offering models the the car buying public does not want.

[Calvin Locke]

1.) GM wants to end the appearance of government oversight of business decisions;

I'm sure Ford might have a better claim in that the BHO regime influenced them to stop running ad campaigns based on specific facts, like that Ford didn't take taxpayer dollars...

2.) And and the automaker is rankled by the stated bias of some consumers against GM vehicles due to government aid in 2009.

GM is rankled? They are the ones that are ripping off the taxpayer coming and going. The taxpayers are the ones that are rankled. And at risk by BHO buying overpriced GM products instead of, say, beefing up security at embassies and consulates...

No bias at Fortune, I see, just like at its sister affiliates (CNN, HBO, ...)

[bmwcyle]

GM is on welfare and it needs to be cut off.

[Eric in the Ozarks]

There was a time when Opel was a hot seller in Europe and the US.
What the heck happened ?

[GeronL]

They are rankled that some people think businesses should EARN their income selling products and services than have government robbed the taxpayers for them??

Gee, I wonder why?

[GeronL]

Yes, imagine that.

People think businesses should get paid for delivering a product or service, they get a bit miffed when they are made to fund an enterprise without getting anything in return.

[GeronL]

http://asspos.blogspot.com/2012/10/gm-blames-bias-for-sales-revenue.html

GM Blames “Bias” for sales, revenue

[SeekAndFind]

RE: There was a time when Opel was a hot seller in Europe and the US.
What the heck happened ?

________________________

According to Wikipedia:

http://en.wikipedia.org/wiki/Opel#Fourth_generation_.282001.E2.80.932005.29

Opel sold something like 1.2 Million cars in 2010, about 6.2% if the European Market.

[ZX12R]

GM Blames “Bias” for sales, revenue

If they couldn't predict the anger and bias the bailout would create, they are too stupid to run a car company anyway. My bias will never be overcome. GM is dead to me.

[STYRO]

Not sure I follow your logic HG. Somehow they are supposed to be able to design a new model that will bring them out of bankruptcy? Seems a bit like rearranging the deck chairs on a sinking ship.

[GeronL]

That was what the VOLT was supposed to do.
lol