"Controlled bankruptcy" for GM

[unixronin]

So says the New York Times.

Under a plan being worked out by the administration, G.M. would file for bankruptcy, according to people briefed on the matter.  It would then use a sale authorized under Section 363 of the bankruptcy code to quickly sell off the desirable assets to a new company financed by the government.  These good pieces might include Cadillac and Chevrolet, as well as assets the company needs to run the business.

Less desirable assets, brands like Hummer and underperforming factories, would be left in the old company.

Proceeds from the sale, including stock in the new company, would be given to the old G.M., helping to settle claims.

The part of this I’m unclear about is which part ends up still being called GM.

Comments

[tomatoe333.livejournal.com]

I saw we call the leftover parts American Motors Corporation.

[bikergeek.livejournal.com]

The problem with GM was they kept callign the leftover parts a "car" and shipping those to the dealer lots.

I think GM may actually go the way of British Leyland and become an ex-entity, having spun off its former brands to the four winds.

[montieth.livejournal.com]

The problem is there's that British Leyland phase where they REALLY suck and we get to pay for it.

[bikergeek.livejournal.com]

Honestly, I suspect that that's where GM and Chrysler are headed right now. They may become viable entities later on, but I don't see any way around them continuing to exist without being on government life support the next few years.

I see the American car industry as facing similar problems to the British car industry in the 1960s-70s. A sense of arrogance that they would always be able to sell cars in the home market. Being technologically behind. Seeing each other as "competition" when in fact the real competition came from abroad. Building inferior quality product to their overseas competition. Having multiple brands and marques that are essentially identical yet are marketed under different brand names, leading to brand dilution, confusion on the part of the public, and one division cannibalizing sales from another. Etc., etc.

[unixronin.livejournal.com]

These, I think, are indeed the real problems of the Detroit auto industry. They build inferior quality vehicles, usually with poor reliability and engines with lousy volumetric efficiency, incorporating no technological innovation that they aren't forced into except on the "halo" models, spending more money on tarting them up with cheap plastic trim variations for each model year than on actually improving the platform. Then they take the basic model, do a little badge engineering on it, and sell it under four or five different brands, relying on brand loyalty and exhortations to "Buy American!" to keep people buying cars that simply cannot compete on a level playing field. And then on top of that, instead of just having a list of standard features and a list of options, they make the buyer play the confusing option-matrix game.

For example, looking at my 1991 Z/28 Camaro, the first car I bought new: There were two engines available, a 5.0-liter V8 or a 5.7-liter V8, both port fuel injected. There were two transmissions available, a five-speed manual or a four-speed automatic. But if you bought it with the 5.0L, you HAD to get the five-speed manual, and if you bought it with the 5.7L, you HAD to get the four-speed automatic. Disc front and drum rear brakes — on a purportedly performance car, in 1991! — were standard; four-wheel discs were available as an option, and a heavy-duty rear axle was available as an option, but you couldn't have both on the same car. There was an overhead center console available as an option on the Camaro (though it didn't offer much beyond better map lights), but you could only order it if you got the Berlinetta trim package; you could not order it for a Z/28. Audio options included radio only, radio/CD, radio/CD/tape, and radio/CD-changer; but if memory serves, you could only order the CD changer sound system in a Berlinetta. It's completely nuts; it forces the discriminating buyer to settle for something close to what they actually wanted.

The badge engineering is stupid, too. If a single company is to have multiple brands, the differing brands should be different cars, not the same car with a different arrangement of fake chrome and a different hood badge. No two divisions of the same auto company should EVER be selling the same car, IMHO. Sharing the underlying platform across divisions is one thing; but the resulting cars should differ in more than the trim, the paint color, and the seat upholstery. Using GM as an example, sure, have a shared Big Truck platform; let GMC build and sell a serious working truck on it, let Chevrolet build an urban-macho SUV on it. You want the SUV, shop at the Chevrolet dealer; you want a working truck, shop at GMC. But fer crissakes Cadillac shouldn't be pretending to build a luxury TRUCK at all. (Then again, Cadillac has been pretending to build luxury for forty or fifty years, so why change now?)

[ithildae.livejournal.com]

The American auto industry faces labor cost premiums ranging from $1500 to $6000 per car that the competition does not have to match. They can put those dollars into better quality parts, and still have costs lower than the American Autos. Couple that with (GM especially) the idea that Americans SHOULD replace their cars every 3-7 years, so the car should last no longer than that, and you have a running perception problem that will last generations!

The American auto industry is facing problems started in the '40's and '50's with their union labor contracts. Their cost structures make them uncompetitive under any scenario. Dropping quality has been their only option, and an act of desperation. They really cannot afford to incorporate new technologies. (Granted, they certainly seem able to afford lobbyists that fend off greater fuel efficiencies and safety considerations, but they generally have to license that technology from someone else.)

[montieth.livejournal.com]

Splits like this are an odd reversal of the mergers from ages past where you had Caddilac and Chevy merging into a larger company. I just wish the old marques would come back with something unique and some profit. Maybe I'm just nostalgic.

I still don't like how the government has its fingers in everything. I damn well don't want to see a British Leyland for the Americas kind of thing. As Clarkson says, British Leyland, Cars built by communists.

[lebo-superman.livejournal.com]

Why, they are BOTH GM - the old one is "General Motors" and the new one is "Gelded Motors".

[metahacker.livejournal.com]

Brand names are an asset...you want them to destroy half the residual value of GM just by changing its name? :P