[shortbread]

To think that the Indian co. will not be affected by the happenings at GM is very naive. Firstly GM India is a wholly owned susidiary of General Motors. Today larger and more established operations of GM especially the ones in Europe are in peril and might be handed over to Fiat for next to nothing. Like it or not GM India very much faces an unstable future as well.

• The media reports have stated that 'GM India has been making operational profits for some time now.' This is a ridiculous statement considering that they have not reveled any real figures. Operating profit is calculated before taking into cosideration the two most major deductions in an accounts statement, namely TAXES and INTEREST. Any Co. can state an operating profit even if it makes Rs.100 before taking these two into account. I dont have the actual figures of taxes paid out by GM India but there is no doubt it will eat a huge chunk of the so called 'Operating Profits'. The most important factor is Interest, GM has invested close to a Billion dollars in India in the past five years. Taking the interest of this amount into consideration, there is no way that this operation is making any net profit.
• GM India is able to show growing nos. each quarter. But consider the figures from model to model, they struggle in their respective segments and lag at the bottom, other than the Tavera and maybe the Spark. Its figures are dissapointing considering that it has one of the largest model portfolios in India and the only cos. with a similar line up (Maruti & Hyundai) are way ahead.
• Its difficult to get acess to the actual figures of the Indian operations. but to put things in perspective in 2008 alone GMs Asian operations (incl. India) made a loss of $917 Million.
• Now the biggest worrying factor was the health of GMDAT in Korea. The Indian operations especially rely on Korea for all its models other than the Tavera. Its aldready recieved a $2 billion lifeline from the Korea development Bank and is asking for more. The operations is running desperately low on money which is affecting its cash flow especially in the second quarter whre it will need external help. First-quarter sales at GM Daewoo dropped 44 percent from a year earlier to 135,489 units with domestic sales sliding 34 percent and exports falling 45 percent.

The predicament for GM India is how will it survive in the situation the co. requires extra money. I dont think the Obama adminisration will allow a single American cent to fund outside operations, espeially since its sunk so much money into it aldready. One will have to wait and see if the need arises, wether the Indian Govt. will chip in.

[Takumi-san]

How is it ok for people to buy sparks? Remember the folks who do go in for this one have earned their money as hard as the person buying the Magnum. Simply bcz the car is cheap does not mean that it wont cause heart burn when spares are not available. In fact the people who go in for the spark are probably youngsters with their first cars , lot of attachment, and a lot of need to keep costs down.

Sorry to get aggressive, but I was one of the Matiz buyers - I have first handedly felt what happens when the company collapses. I would ask everyone finalising a GM product to wait and watch to see what the US does. The spark may be perfect, but the amount of problems that you would sign up for in case of a bankruptcy may mean that you would be better off with any other, even a Maruti 800. Trust me, been there, done that.

Originally Posted by revhappy

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

[Takumi-san]

Parts are available erratically. Luckily for us, the Indian ingenuity comes into play. As soon as the smaller factories realised that there was a demand from Daewoo owners, they started popping up with their own versions of spare parts. These are what you usually would never put in your car but once the inventory of the original parts is over, its either this or the kabaddiwala.

Needless to say the resale value goes for a complete toss. The fact that the car can be resold at all is a marvel of the Indian markets.

I had the Matiz and luckily for me, by doing jugaad most of the time parts of the Alto, Zen and 800 could be hijacked in to doing duty. Given the amount of attachment that I have with my cars, its the sort of situation that I wouldnt even wish on my enemy. For the spark, I believe the same situation would prevail.

Originally Posted by RoadFiend

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?

[sjcherian]

@Takumi-san. One of my fathers close friends had bought a Matiz in the early days of launch. He was then not able to fix it or sell it till the jugaad parts became available. I think he finally sold it for a pittance.

[tortoise]

Originally Posted by shortbread

Firstly GM India is a wholly owned susidiary of General Motors. Today larger and more established operations of GM especially the ones in Europe are in peril and might be handed over to Fiat for next to nothing.

Imagine..just imagine..if FIAT can take over India's GM operations and use their dealership and service network to support FIAT as well.

[Speed Pujari]

GM running in losses is not a new thing to be heard.
For past more than 15 years,it may sound funny but, GM is surviving only because of its financial services BU named GMAC and also after sales service and spare parts. So GMAC is actually feeding the automobile sector employees.

The problem of GM started due to its governmental type behavior. Dealers had been claiming false incentives, GM did not have any proper process of auditing the claims till lately, far late after realisation.

Their second source of income is Onstar. So the business was/is surviving due to some BUs in bits and pieces. They are doing worse in their core sector for past long.
Americans were purchasing GM cars more due to patriotism, which lasted very soon with their cars. Switching to better quality cars like Toyota was a smarter decision and also replacing globalisation with patriotism.

Plus there were many more wrong decisions like acquiring all tom,dick and harry american brands and wrongly implementing the lean management principles made the company fall.

GM was my client for 4 years in my s/w engg career and have been witnessing their filthy systems.

[hemantwaghe]

As I am writing this GM bankrupsy seems real and may be announced on Monday.
Really it is sad - frankly I am the person who wanted to owe Hummer one day .....or another choice would be Cadyy Sedan or Caddy escalade.

As my awareness of US finance is not good -i think GM can bounce back.

Friends you want to add someting...?

I know it is discussed before but what will be result of this on GM India? And thousands of car ownrs?

[centaur]

GM India says that it is totally insulated from GM US. They are even considering launching a new car this year. Spark LPG is going to be launched as well. They say that the INDIAN operations are profit making. Though convincing customers to buy a GM car will be difficult they will still continue to remain afloat. SO as of now there is no reason for GM India customers to panic. This is what they had to tell. All we can do is wait and watch

[idea1979]

Originally Posted by centaur

GM India says that it is totally insulated from GM US. They are even considering launching a new car this year. Spark LPG is going to be launched as well. They say that the INDIAN operations are profit making. Though convincing customers to buy a GM car will be difficult they will still continue to remain afloat. SO as of now there is no reason for GM India customers to panic. This is what they had to tell. All we can do is wait and watch

These are highly optimistic thoughts. However, GM - India cant be isolated with financial happenings of GM - US.

[amit]

Originally Posted by centaur

GM India says that it is totally insulated from GM US. They say that the INDIAN operations are profit making. SO as of now there is no reason for GM India customers to panic. This is what they had to tell.

I had a Matiz when Daewoo went kaput. Daewoo India back then had made these exact statments. We all know how it actually turned out for Daewoo India.

[StarVegabond]

Generally Chapter 11 or Bankrupsy filing is nothing but a protection from the debts.
GM is telling the government that it can no longer pay the interest or the principle of the debt which it had taken from various sources so that government can protect it from law suits. over next couple of years, GM might restructure operations, business models, portfolio and become more aggressive in the market as it will be minus the debt, interest burden on the cashflow, overheads etc.

[shortbread]

General Motors has filed for bankruptcy protection, making this the biggest ever bankruptcy of an industrial company. The authorities involved have said that a resolution will be in sight within Three months, which is seen as ambitious given the potential for a serious legal challenge from disgruntled creditors.

source; World business, finance, and political news from the Financial Times - FT.com UK

[sidindica]

General Motors declares bankruptcy

GM officially declares bankruptcy

Over the last few days, GM’s impending bankruptcy filing was anything but a secret. Over the weekend, it was probably the topic of discussion at millions of dinner tables across America and around the world. But the moment has finally arrived, and it will likely be days before the gravity of this situation is fully realized. A once hypothetical strategy to separate GM’s good assets from its toxic liabilities was set in motion this morning at 8:00 a.m. with a Chapter 11 filing in a New York bankruptcy court.

U.S. President Barack Obama will hold a media briefing from the White House at 11:55 a.m. today to explain the goals of the government-backed restructuring plan and quell the concerns of those involved (which, to be fair, is every American taxpayer). GM CEO Fritz Henderson, will host a press conference around 12:15 p.m., immediately following Obama’s speech.
GM’s good assets — Chevrolet, Cadillac, GMC, and Buick — could emerge as a part of a “New GM” within 60 to 90 days. The damaged goods — Pontiac, Hummer, Saturn, Saab, and Opel — will be liquidated or dissolved over a much longer Chapter 7 process. Opel is likely to live on under new ownership, and Saab also has a reasonable shot at a successful spin-off. Saturn and Hummer might find new owners, but the odds are lower. As for the Pontiac division, it will disappear for good.
There is no question General Motors will live on with its four core brands, in one form or another. After all, the U.S. government has committed virtually limitless funds to this goal. But there is a great deal of concern among the company’s 56,000 workers and the even larger number of people employed by GM dealers. GM’s restructuring is expected to lead to nearly a dozen plant closures and 20,000 direct job losses. That doesn’t include the 100,000 jobs expected to be lost following the expected closure of more than 2,000 dealers.
Implications for the U.S. economy also go beyond lost jobs and shuttered dealer franchises. The government has already poured $19.4 billion into GM, and another $30.1 billion will probably be needed to get the company back on its feet. $50 billion might pale in comparison to the financial sector bailouts of late 2008, but worries over runaway government spending are increasingly weighing on the U.S. dollar and the long-term outlook for America’s finances.
All of this will leave the U.S. government with a 60 percent stake in the company, while the Canadian government will dump in $9.5 billion for a 12.5 percent stake. For the governments to recoup the $60 billion spent, the new GM will eventually have to attain a market valuation of at least $83 billion. That’s not inconceivable, considering Toyota’s $170 billion market cap. But it will be a long road to recovery.

another link: BBC NEWS | Business | GM enters bankruptcy protection

Car giant General Motors (GM) has filed for bankruptcy protection, marking the biggest failure of an industrial company in US history.


The widely expected move comes after GM had seen its losses widen following a steep fall in sales in recent years.
The move into bankruptcy protection has been backed by the US government, which is now expected to take a 60% stake in the company.
The White House is also due to announce an extra $30bn (£18.5bn) of aid for GM.
President Barack Obama will host a press conference on GM's future later.
GM, which had already received $20bn of state aid since the end of last year, said in its bankruptcy filing that its current debts total $173bn.

Expected job cuts
US Chapter 11 bankruptcy protection gives an American company time to restructure its finances while being protected from its creditors.

The restructuring is likely to drastically change GM, with some 20,000 US workers thought likely to lose their jobs as the firm streamlines its operations.
However, GM's European arm is likely to be spared bankruptcy following a proposed deal by Canadian car parts maker Magna International to buy GM Europe's Vauxhall and Opel brands.
It is expected that GM may be able to exist bankruptcy protection within 60 to 90 days.
GM, once the largest company in the world, has been losing market share since the early 1980s.
It has been driven to bankruptcy because of high production costs and by the collapse in credit markets and consumer spending. It made losses of $30bn last year.
GM was also slow to move away from producing gas-guzzling SUVs when consumers were looking for more fuel-efficient vehicles.
Toyota sold more vehicles than GM in 2008, putting an end to the American company's 77-year reign as the world's biggest carmaker.

[greatmana2000]

I guess this is all common . Fiat was in a similar situation a few years back . Ford , if not for the TATA would also have been in the same situation .

GM will definitely exist and may be it will exist as a trimmed company without the so many brand portfolios that we see today .

GM has a stake in VM motori and they supply engines for Hyundai , GM , and so many other manufacturers . The unit is a profitable one as well .

Even Toyota has posted losses this year .. so doesnt it mean that toyota has also failed ? to an extent a lower degree ?

[Gilead]

GM has been in a state of steady decline for the last 25 years or so. Ultimately it had to come to this. So is the Obama administration going to decide what kind of cars GM will build?

Toyota posted a loss only this year and that too due to the recession. GM has posted losses of some $80B for about 7 consecutive years now. These two companies are not comparable at all.

The actual owners of the company, the stockholders, got completely wiped out. The UAW appears to have gotten its members a cosy deal.