GM posts $6 billion loss on shrinking sales, fear of bankruptcy


I want to take this 4 inches of column space to let Mr. Henderson know that those of us who have spent our lives in the auto industry admire him for what he is attempting to do. This is one time that I would not want to be a dealer or the CEO of GM. Good luck to all of you.

I am not aware of what the revenue/expense breakdown is, or what it must be to create a 6 BBBBBBillion dollar loss but I do believe the handwriting is on the wall. Even if they do issue another 60 billion shares, or deleverage their balance sheet, even with concessions from the UAW and bondholders, each method seems like veiled bankruptcies to me.Deleveraging can have serious financial consequences when a company tries to unwind assets that are illiquid. In GM's case, deleveraging means selling already de-valued assets at even steeper discounts. As a result, deleveraging will lead to downward pressure on security and asset prices of the company and will unwind their positions during the deleveraging process. I am no accountant but that just does not seem feasable at this point. The UAW has stated they have no interest in long term ownership of the manufacturers. I am not a fan of the UAW but for all GM has done for them for many, many years, it is time for them to step up and do the right thing and concede, not just make concessions. The gravy train has ended it's great ride. Many workers in America and around the world have lost pensions, health care, etc. due to global economics pressuring national economics. It does not appear that GM can continue to burn through 10 billion dollars a quarter to try to prop up everyone around them.

For there to be any chance for survival, I believe only a well structured bankruptcy will allow them to deleverage their financials, trim down dealer counts (although I am not certain it needs to be as dramatic of a cut as they have predicted) and review and rewrite labor contracts and re-invent themselves as a true automobile manufacturer with a quality dealer pipeline and shed themselves of all of the past ego driven purchases of brands and self serving contracts and restructure from the ground up. That cannot be done in 3 weeks and I don't believe that hanging onto the hope for another quarter of losses is a wise option. Bite the bullet, do the deed, get it over with.

The only salvation here would be to get the billions of dollars that the government gave to the lenders several months back and get it into the hands of the American consumer. Rebuilding, restructuring, bailing, bonding, deleveraging, they are all insignificant if the consumer is not buying the end product. A car. Keep your dealers, get the money flowing in this country rather than foreign countries where much of that money has gone. Unless people are buying cars, all of this is insignificant.

Again, Mr. Henderson, I do not envy you today. I hope you make the right decisions over the next several weeks. Many families are depending on you. Please think of them as you move forward. You can have change without progress, but you cannot have progress without change. It's time to change.


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