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Old 27th February 2009, 16:11   #1
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Default GM Bankruptcy- and it's effect on India..

GM has just declared a massive 31 Billion Dollar loss in 2008, (Putting it in perspective, thats similar to Sri Lanka's annual GDP). It has aldready burnt through 6 billion given by the US Govt. and is waiting for a decision to be made on an appeal for a further 30 billion. But if this company makes the kind of losses it does, one begs to question its reason for being alive. What are the chances of the US Govt. lending it more money knowing that they will come back for more.
But what concerns the Indian auto scene is the future of GM India. We have been so far immune from the aftershocks of the US Auto debacle but not anymore. The future looks bleak for GM India as well
  • Although India is (or was till lately) a growing market, GM asia Pacific (including India) has made an annual loss of $879 Million.
  • The only way GM can survive is if the US Govt. bails it out, the only reason they will do this is to keep the American factories, Jobs and Pensions safe. The US Govt. will not allow GM to pump public money into its global operations.
  • Its still not decided if the US Govt. will save the company, people are asking from various quarters wether there is any use saving GM just to see it drown again.
  • GM lately has left many of its global operations high and dry, Saab, Opel, Vauxhall have been left to fend for themselves or find backing from their own Govts. This is hugely irresponsible of GM considering the fact that they knew the huge mess they were getting into and should have made their subsidiaries independent or put up for sale earlier rather than give them a few weeks when things turn desperate.
The situation is really unfortunate especially for a company like GM India which has a lot of potential. I am not sure as to what extent can the operation remain independent but it seems highly unlikely. They have posted improving sales figures each year, but the scenario is not that simple.
A majority of GMs sales are dependent on the Tavera and Spark and even a model like Spark is sold and does not have the volumes to keep a company afloat on its own.
Rest of the Model line up although promising havent been a sales success, with most of the models languishing in the bottom of the sales pile in their respective segments. for a company that has a model in every segment of the market its total sales figures are no where near to other companies with a similar product portfolio.
There is a lot of PR generated regarding expansion plans and new models but GM India has not been very clear about its footing in the scenario of its mothership collapsing or leaving its Indian operation on its own. I am sure that they have thought about the situation themselves and must be formulating survival strategies, I hope they keep an open book and win the trust of customers who will be investing a large part of their savings in their products.
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Old 27th February 2009, 16:13   #2
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Daewoo India was selling well, but when Daewoo collapsed, everybody associated with it went down. Same is the case here, if GM goes down, GM India will also go down. But if GM goes down, it will shake the earth, unlike Daewoo which mostly affected East Asia.
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Old 27th February 2009, 16:53   #3
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The US government doesn't want the auto industry to go down (too much depends on it, economy, politics, jobs etc. ). So hopefully GM will survive, and the government will do all it can to ensure that.
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Old 27th February 2009, 17:37   #4
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It's dreadful to think of the aftermath if the US government does not aid GM. Just hope and wish GM find some means to recover.
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Old 27th February 2009, 18:10   #5
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I think as long as people are buying cheap Sparks under 3 lacs it should be ok.
But people should be wary of buying the more expensive Optra Magnums
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Old 27th February 2009, 18:30   #6
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GM will become "Government Made" instead of general motors.
i guess there is no harm in US trying to give jobs to their people. if they are making so much loses does not make sense to be in a market in india and add to those loses. i recently saw a pdf with new cars for 2009 and GM has very very very less presence in that list of cars.
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Old 27th February 2009, 19:06   #7
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GM came to India in collaboration with HM. If GM goes bust, I think HM will buy all the dies and continue making Optras, Aveos, U-VAs, Sparks and (horror of horrors) Taveras till the next century.
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Old 27th February 2009, 20:55   #8
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the company wont go down. What many fail to see is that there is also a possibility of a much smaller GM and chrysler. Maybe smaller even than Nissan.
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Old 27th February 2009, 21:50   #9
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Quote:
Originally Posted by Aditya View Post
GM came to India in collaboration with HM. If GM goes bust, I think HM will buy all the dies and continue making Optras, Aveos, U-VAs, Sparks and (horror of horrors) Taveras till the next century.
Does Mitsubishi have anything to do with HM? If my memory serves me right, HM+GM broke away and HM tied up with Mitsubishi.

GM made the awesome (for their day) Opel Astras and Corsas, the Opel Vectra was made available as a CBU against import entitlements. The Corsas did not do too well as GM never capitalised on their potential.

GM thought they could sit back and rake in the moolah by using their Chevrolet brand and, started selling the Daewoos as Chevrorelts. This, according to me, was the beginning of the end.

The Tavera though is a competent vehicle in its class and is derived from an Isuzu.

Cheers,
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Old 27th February 2009, 22:24   #10
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If GM goes down we in India will also feel the earth shake beneath our feet. And with the current economic scenario that does not sound like a very nice thing to happen. To begin with American economy has a lot riding on cos. like GM either directly or indirectly. If GM collapses then lot many sectors will crumble. This in turn will hit the revenue of many organizations here. Even here there are many cos. (like sundaram fasteners) who have a direct link to GM's fortunes.

All in all its a scary proposition if that happens.
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Old 27th February 2009, 22:26   #11
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[quote]GM lately has left many of its global operations high and dry, Saab, Opel, Vauxhall have been left to fend for themselves or find backing from their own Govts/QUOTE]

Not only GM but Ford too reduced its stake from volvo, mazda, etc. But as per their balance sheet, ford can manage to run the company till 2009 without any government support.
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Old 27th February 2009, 22:55   #12
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I am not sure of Chrysler but GM and with total repsect to Ford, they have made themselves competitive. Look at the FORD lineup and you can swear they know how to get things around.

GM will probably stay as a Cadillac, Chevrolet, Holden,GMC and pontaic brand. All the other brands will be killed and 60-70 plants will be closed.
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Old 27th February 2009, 23:22   #13
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Quote:
Originally Posted by Zappo View Post
If GM goes down we in India will also feel the earth shake beneath our feet. And with the current economic scenario that does not sound like a very nice thing to happen.....
Yeah a lot of Indian auto ancillaries cos dependent on these cos. Also I guess this uncertain future of GM is the reason for its poor sales nos despite its product portfolio.
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Old 28th February 2009, 01:07   #14
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Gmotors has been asked by the us congress to come up with a plan to break the behemoth into smaller more competitive companies, the size of fiat, suzuki, nissan. Unfortunately its economies of scale which was the solution for the last decade that has become the death knell for the current lot. Watch out for companies like tesla motors, my fav of the lot.
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Old 28th February 2009, 01:33   #15
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sounds like a good plan. As I said only parts can survive.
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