[shortbread]

Even if the US Govt. decide to pump money into GM so that it can barely stay afloat, what are the chances of the money trickling into India. There is no way the Americans will allow public money to keep operations in India running. With the reputation GM has recently made in aborting the likes of Opel, Saab, Vauxhall the chances of a financial companies lending money to GM are low if not none at all.
Forget the ancillary units, what about the huge number of people who bought Chevrolet. As it is the brand wasn't well known for its resale value and now once the news spreads when GM declares bankruptcy it will only worsen.
Plenty of taxi drivers/operators depend on the likes of Tavera for their daily bread.
GM India should come forward and reassure existing and future customers rather than take a wait and watch approach. They have a decent product line up and what is happening is not their fault. But soon they will run into a wall and they cannot keep denying that.
In such a scenario what should the owner of a GM product do??

[RoadFiend]

Originally Posted by shortbread

Forget the ancillary units, what about the huge number of people who bought Chevrolet. As it is the brand wasn't well known for its resale value and now once the news spreads when GM declares bankruptcy it will only worsen.
In such a scenario what should the owner of a GM product do??

When any auto company declares bankruptcy, are they required by law to provide support for their existing customers? As it is, GM service wasn't anything to talk about (at least in Bangalore).
I wonder how the Cielo and Matiz owners coped when Daewoo folded couple of years ago. Any experiences that can be shared with us here?

[aaggoswami]

In US, there is an overlap between suppliers, so if any one manufacturer fails down, the rest will follow. Ford, as we all know is in healthier state than the other two, but even if any one falls down, others will be dragged. So the US government wont allow for this. They will do whatever they can to save GM.

But if the failure occurs, the repercussions will be more than expected. In India where GM has a relatively marginal presence will be more interested in selling its properties and making money for itself. Or they may shut down because I dont think that they are even managing profit out of Indian operations. So their first priority will be to get rid of or to stop facilities that are not able to make even a single penny for them. This is why I believe that India will be affected unlike China where GM is having a good presence.

I dont know what will happen to the existing customers, but if I were in the car market, I wont be buying GM at this point of time. Its easy to say that one will get support for this and that, but in reality its very difficult to get even minor support. Even the mighty Suzuki India is not able to support its unsuccessful old model like Baleno.

Overall, very little light at the end of the tunnel and that is US government stepping in to save GM, GM which lost approximately the same amount that they are asking from US government as of now.

[sidindica]

found this, makes for an interesting read.

Why GM Deserves to Fail - GM Inside News Forum

GM deserves to fail period. This company has been mismanaged since the beginning and it is sure not going to be fixed anytime soon. From when Billy Durant ran the company into the ground TWICE, to the 1980’s with cost cutting and rebadging galore, to 2009 with CAFE and the economy looming down their throats. GM has shown us they cannot get themselves out of dire situations without panicking and knee-jerk reactions.

Let’s start from the beginning. General Motors started back in 1908 when Billy Durant was buying all of these automakers. The man was a genius when it came to forming a company, but had no idea how to run it. This caused the banks to take over GM in 1910 for 5 years trying to right the ship before their investment went to hell. Mr. Durant again showed his genius when he ran Chevrolet and took back GM by buying up GM shares. When new vehicles sales collapsed again, he was unable to manage a strategy that would return the company to stable grounds and he was ousted again and Alfred Sloan took over.

Under Sloan’s control General Motors was able to claim the title of world’s largest automaker in 1931, which is a great achievement considering it was in the middle of the Great Depression. Under Sloan’s control I will argue this is the only time GM was able to deal with a crisis when it rose to power. GM continued to grow and grow until it reached their highest marketshare of 55% in the 1950’s. GM was booming. Basking in the 50’s and 60’s glory of the muscle car era. They were even able to stave off the first Japanese invasion due to no one wanting small cars and the quality was sub-par at the time. Then came the first energy crisis of the 70’s and the second invasion of the Japanese automakers. At the time GM had nothing in their product portfolio to deal with the American sudden change of taste in vehicles. Fortunately, the Japanese did by offering small and fuel efficient vehicles. After the oil embargo was lifted, the US government formed the EPA and set a mandate of that the companies vehicles must average 25 MPG as we enter the “glorious” 1980’s.

First let’s review what is the structure of GM’s brands. Chevy was the entry level brand, Pontiac the performance brand, GMC truck division, Oldsmobile being entry luxury, Buick being mid-luxury, and Cadillac being top luxury. Each division filled a niche and had hope that the customers would slowly work up to Cadillac as they kept on making more money. This was great as each division didn’t invade their particular niche and were relatively separate with everyone developing their own components and little sharing.

So now we see GM going into panic mode and making knee jerk reactions with the Japanese invasion and the 25 MPG mandate. They integrate all the brands into one entity pretty much. Losing their independence in order to cut costs. They started sharing engines, platforms, etc. Then came rebadging where they would take a Chevy vehicle and rebadge it across the line with minimal changes. The most famous vehicle is the Cadillac Cimarron which was a rebadged Cavalier with very minimal changes. They also went Front Wheel Drive happy due to their more efficient packaging and fuel savings. Cadillac taking the brunt of this sudden change. They also even considered and completed prototypes of front wheel drive Camaro’s. Then there was the lame attempt of Displacement on Demand or Active Fuel Management as it is called today. Officially, dubbed the 8-6-4 engine which ran on 8, 6, or 4 cylinders as required. A great idea, but lacked the computing power to make it work reliably as it does today. GM probably realized this, but were desperate to do anything to keep customers happy. Then there was the cost cutting gone wrong with the Oldsmobile diesel. Taking a gasoline engine block and converting it to run on diesel which burns at a higher compression rate. This caused the engine block to break eventually and became a reliability nightmare. The Old’s diesel also ran dirty as hell which killed the image of diesel engines which contributes to todays lack of diesel penetration into the U.S. market. We can thank Saturn for killing the FWD Camaro, but it also started another unnecessary brand. There was no reason why General Motor’s could not have made the small cars into Chevy and force their dealers to fix themselves or risk their franchise. But, what done was done and Saturn was created.

Enter the 1990’s and the baby Saturn brand. Probably shocking the industry, Saturn had a warm reception to the American youth. The brand paid for itself after 4 years when the first car hit the market, their customer base was extremely loyal, customer service was top notch and changed the industry with the polymer panels. Who was probably the most shocked about Saturn’s success was big bad Chevrolet. They groaned and moaned to the higher ups as they were probably worried that Saturn could potentially unseat them as GM’s volume brand. And they got their wish too. Saturn was starved of product and sales crashed as product grew stale. Saturn was never able to recover from the crisis again. But, hey chin up. GM was booming in general. Marketshare was recovering and they were raking in the profits. GM has the surge in SUV and truck sales to thank for that. Wait a second here, GM relying on a class of product, where does that sound familiar? Oh that is right, back in the 60’s and 70’s right before the fuel crisis hit when they relied on fuel guzzling muscle cars. GM was setting themselves up again for another crisis in the future for not paying attention to the rest of their lineup.

Cue 2005 and gas prices soaring past $3 a gallon and even approaching $4 in some areas. SUV and truck sales plummeted and GM’s profits went down for the ride as well. Posting a staggering loss in 2005 which prompted doom articles being posted up all over the Internet in 2006. GM entered restructuring mode stat. But, wait a second! They based most of the plan off of the profits of their new GMT-900 based trucks and SUV’s! Gas prices still looming in the $2 range and sales becoming stagnant in the segment if not dropping still. They also refused to enter into the hybrid market, but for PR sake, made the joke of a hybrid; the Silverado hybrid. Things did look up for GM in 2007 as they just renegotiated their UAW contracts and signs of the turnaround plan working started showing up. Also great news for enthusiasts, a huge array of RWD vehicles were planned including the return of the Camaro! The Impala, G6, DTS, Lucerne and possibly more products were all planned to go RWD! This would also make Pontiac into the performance brand it once was! BOOM! Congress now requiring a 35 MPG mandate by 2020. We enter the 1980’s again. GM panics and cancels EVERYTHING RWD except for the Camaro and DTS/Lucerne replacements. But, the DT7 didn’t remain for much longer either. That was killed too which of course brought the Lucerne replacement down with it. Now in 2009 we have GM on the brink of bankruptcy. Only remaining alive due to federal loans. Which then they go further into 1980 hysteria and now killing Cadillac’s revitalized image. We have the wonderful FWD Theta-Epsilon based SRX, Alpha is on hold, Escalade going to Lambda, and now an Epsilon II based DT7 is rumored to be green lighted any day now!

As highlighted in the previous paragraphs, GM has been unable to cope with any kind of crisis. Seeing how the government is too scared to require a total management change, if GM ever recovers from this situation there will be no guarantee GM will fix the mistakes that caused them to be in this situation and will not learn from the past. These events also has proven that GM is a reactive company that has the ability to gather intelligence on future market changes worse then the CIA’s ability to gather security intelligence. It will be better for all of us to have GM fail and have the viable divisions to be spun off in hope they can develop the product necessary for them to survive. This will save us money in the future when a crisis arises again and GM can’t cope with it and needs more federal money to keep them afloat when they refuse to be a proactive company.

If GM fails in detroit, the Indian operations will also collapse. The Indian operation of GM or Ford does not own the IP for the cars which they are selling. The only thing worth of value are their factories.

No one will come forward to buy GM India or Ford India while they are still solvent because it also means taking on the responsibility for warranty and cars already sold. Financial situation being what it is, even after bankruptcy, selling the factory might prove difficult. Look at Daewoo's factory, and that was during the good times.

As Indic people, we shouldn't be buying GM or Ford vehicles anyway. Many Jewish people will not drive a German car still. Our wounds are deeper and fresher (although many Indics won't even acknowledge there are any wounds....too inconvenient!).

[shortbread]

If that's the case, wont the dealerships have any liability for the cars warranties, they're the ones who pressurizes the customers into buying extended warranties. Cant they still guarantee spare part supplies and keep the workshops running, they make huge profits from it anyway.

[nickatnite]

What is the point of this thread?. GM will never be allowed to 'collapse' and there's nothing unusual in the bailout. Been there done that. The Germans, the Italians, the Japanese and all are guilty of bailing out their major industries in times of crisis. I guess there are more cable news channels now and they will go to any lengths to attract audience. In the Indian context, i believe the economic downturn is a blessing in disguise!. Prices have come down in an overpriced auto market where greed was the religion. And, this holds good for other consumer goods too. The indian automakers can't go back to the old ways once the economies turn around. And, this is a good thing.

[shortbread]

Ive taken these quotes of Financial Times

• GM said the opinion from Deloitte & Touche, the auditing firm, “states that our recurring losses from operations, stockholders’ deficit and inability to generate sufficient cash flow to meet our obligations and sustain our operations raise substantial doubt about our ability to continue as a going concern.”
• GM said: “If we fail to do so for any reason, we would not be able to continue as a going concern and could potentially be forced to seek relief through a filing under the US Bankruptcy Code.”

the links
FT.com / Companies / Automobiles - GM auditors warn of bankruptcy risk

General Motors may file for bankruptcy- International Business-News-The Economic Times

Like it or not guys, this is actually happening

Even if the U.S Govt. does give the co. life support there is no chance of funding reaching global operations.
Once bankruptcy is declared the chances of vendors continuing supplies is minimal. One will have to wait and see what GM India has to say.

[loving_alaap]

Well, i think US will not let it down its .

GM is one of the biggest company of US; is making countless other machines / instruments.

US cant afford to loos GM.

[aerohit]

GM is going down because not enough people buy GM products. SIMPLE!

If GM cant make good cars, let it go down.

Thats what capitalism is all about. (may be US Govt dont believe in capitalism anymore - LOLz)

Its about competition!


If TATA goes down, will Americans feel sad and create a thread about it? I am not sure.

By the way - If Indian Govt would have supported TATA, US would have harshly criticized such a move - as it violates the American principles of free market capitalism! DUH!

[vishdes]

GM India may have an American parent but its and Indian company, pays Indian taxes and employs many Indians as its employees. It brought many employment opportunities when it built its factory near Pune. Now with its powertrain unit coming up at the same place, its will further increase employment opportunities. And yes, they do have a policy of employing youth nearby as workers. Well that in my opinion is as good as any Indian company.

Frankly, I also feel that they have done a lot to clean up their act after Opel. With Chevrolet, they certinly have done some right things. Whatever its parent company did, we are not concerend. Although I do understand that there is a very good chance of Indian oprations going down as was the case with the erstwhile Daewoo. But I would not bet my money on it yet.

The Indian operations have been making money unlike its parent. And they do have some good models under their belt and on the way. What needs to be seen is whether the support continues should the parent goes under. I guess it is a wait and watch game.

[sidindica]

yet again, for the 4th tme in less than 2 years since the spark was launched, GM is offering Rs. 55,000 cash discount in the spark. Is the car a sales disaster in India? or is it a sign of troubles mounting in GM India?

what are your opinions? will the spark have the same fate as the matiz even though GM claims that this celebration is to commemorate 30 lakh spark customers globally?

[bharanidharang]

forget the analyst. GM itself does not feel that it would be able to survive. i guess they are liquidating stocks (cars...) in all markets they operate.

[sonirohit]

IMHO - GM should be allowed to fail, Washington may keep giving aid to GM, but they'll keep coming back every few months for more.
In last quarter GM was provided money to restructure it's operations - has GM done enough? No!
It's the theory of evolution - "Survial of fittest", I don't see that happenning, I don't see it evolving. Crisis like the current ones need companies to respond quickly in order to keep going. I simply don't see that happenning.

Coming to GM India - indian operations share the same GM's DNA, have they done something worthwhile to evolve in the past 6 months or so? No (Instead came up with a Crappy Spark Music Edition)... GM India is also going to die a natural death if GM goes belly up.

[csnanjappa]

BBC NEWS | Business | EU calls for crisis talks over GM

The European Commission has called for a crisis meeting among EU states hosting General Motors (GM) plants.
EU Industry Commissioner Guenter Verheugen said that the way GM was "dealing with the issue of Europe is not acceptable".
Earlier, the troubled carmaker's auditors said there was "substantial doubt" about the ability of General Motors to stay afloat.
Last week GM posted a $30.9bn (£21.9bn) loss for 2008.
It also warned that 2009 was set to be "challenging".
Shares in General Motors fell more than 15% in New York trading.

Liquidation fear
Ongoing losses and the struggle to generate cash flow meant the firm's ability to continue as a going concern should be questioned, said the auditors.
The firm, which plans to cut 47,000 jobs, has said it might need another $22.6bn in government loans to survive.
It had already received $13.4bn in federal loans as it struggles in what analysts say is the worst vehicle sales market in 27 years.
GM said that its creditors had decided not to force the company to repay more than $6bn in loans following the auditor's warning, in order to let GM press the case for more government financial aid.
"The corporation's recurring losses from operations, stockholders' deficit, and inability to generate sufficient cash flow to meet its obligations and sustain its operations raise substantial doubt about its ability to continue as a going concern," auditors for Deloitte & Touche wrote in the annual report.
GM reiterated on Thursday that a bankruptcy filing could lead to liquidation, as the company would not have enough funds to finance its reorganisation.
Besides, consumers could be reluctant to buy bankrupt carmakers' vehicles, GM said.
According to GM, its February sales plummeted 53% from a year earlier, while its rival Ford posted a 48% drop.
The auditors' remarks reflect comments already made by the firm about its difficulties.
GM said in its annual report: "Our future is dependent on our ability to execute our viability plan.
"If we fail to do so for any reason, we would not be able to continue as a going concern and could potentially be forced to seek relief through a filing under the US bankruptcy code.