General Murders rough times ahead

G3RMAN · January 16, 2009

This may be a bit long and boring but it is a big issue!

For most of the second half of the 20th century, one automobile company dominated the global industry: General Motors. With its traditional brands -- Chevrolet, Pontiac, Oldsmobile, Buick and Cadillac -- it held close to 60 percent of the American car market in 1960, when Detroit auto companies took 90 percent of sales in the United States. But by the 1970s, G.M. was buffeted by issues like fuel economy, labor unrest and the emergence of Japanese auto companies, among them Toyota, Honda and Nissan.

As G.M. recovered, it also faced a stiff challenge from its crosstown rival, the Ford Motor Company, whose financial strength after downturns in the early 1980s and 1990s cause some analysts to wonder whether Ford would one day unseat G.M. as the biggest American car company.

Tougher competition was only one of G.M.'s problems. In 2005, it stunned the auto world by losing $10.4 billion. It embarked on a reorganization plan that included plant closings and the elimination of 30,000 jobs. G.M. maintains that its turnaround program is showing results, but in the second quarter of 2008, it reported a loss of $15.5 billion (which followed a $3.3 billion first-quarter loss) and announced additional job cuts.

As the price of gasoline at the pump topped $4 a gallon, G.M. (and many of its rivals) was surprised by a dramatic shift toward smaller, more fuel-efficient cars and away from the pickups and sport utility vehicles that served as its mainstay. The company cut its fourth-quarter 2007 production by 10 percent, and by July 2008, overall United States sales have fallen 20 percent. G.M. announced plans to idle plants to address the shrinking demand for pickups and S.U.V.'s. At the same time, it was adding shifts to try to make enough small cars.

Sales slowed by high gas prices ground to a halt as the Wall Street meltdown scared consumers and cut off many from credit. In mid-September G.M.'s chief executive officer, Rick Wagoner, and the heads of Ford and Chrysler went to Washington to ask for $7.5 billion that would support $25 billion in loan guarantees that had been promised to help speed the switch to more efficient cars.

In November the heads of the Big Three returned to Congress to ask for $25 billion in direct aid, of which $10 to $15 billion would go to G.M. Democratic leaders supported providing the money out of the $700 billion financial bailout fund, while President Bush supported allowing the $25 billion in loans for efficient technology to be used to keep the companies afloat instead. The automakers returned to Detroit having heard many lectures on their mistakes, but without any aid.

AU5513 · January 16, 2009

The fate of the motoring world depends on GM

G3RMAN · January 16, 2009

In the stock market exchange this is crucial

YeOldeTDUMan · January 16, 2009

You're a little out of date there as both GM and Chrysler have been given aid by the US Government, Ford don't need aid at the moment but want help with cash flow (from what I remember)

Also the price of oil is now below $2 in the US so at the Detroit show people were questioning will the American car buying public actually be interested in the 'greener' cars or will they stick to their traditional purchases

Oh and what were you trying to argue or were you just trying to make a statement as I'm sure this has been discussed before when it first surfaced back in November last year