"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

[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.)