Does Bailout Money End Up Killing GM?
- March 29, 2009
- Automobile Cool News, Buick, Cadillac, Chevrolet, More Categories...
- Posted by dbarrett
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It’s been a busy weekend. President Obama is preparing his speech to the country about the future needs of automakers. And, before the dawn breaks on Monday, it’s already being reported that GM boss Rick Wagoner is done. According to sources within GM and quoted by mainstream media, CEO Rick Wagoner will step down at the request of the Obama administration. Does Wagner leaving improve GM’s chances for survival, or was the self-inflicted damage back in November, combined with taking money from the Feds the ultimate undoing of the nation’s largest automaker?
Perhaps most telling is the just released poll from Rasmussen Reports. In it, Americans indicated they would be less willing to purchase cars from an automaker that took federal funds, than they would from a bankrupt company. Amazing as it sounds, 88% of those polled said taking taxpayer money nailed the coffin shut, while 63% said they were unlike to purchase a vehicle from a company in Chapter 11 or in liquidation.
GM and Chysler sales dropped 45% in the past five months compared to last year, while the rest of the industry dropped at a still steep, but less precarious 33%. People are voting with their wallets, and despite improvements in quality, fuel consumption, and huge discounts, both GM and Chrysler have both front wheels dangling over the edge of the cliff to never-never land. It’s a sad state of affairs, as AutoPacific research has determined that a growing number of GM product owners are delighted with their vehicles. GM products are steadily improving in quality and a recent editorial by AutoPacific CEO George Peterson accurately depicts American cars and trucks as being a solid choice for anyone looking to purchase a new vehicle.
Regardless, President Obama, not one to suffer delays in his multi-faceted agenda for financial stabilization, is the first president since Franklin Roosevelt to even consider dictating how a Detroit automaker should function. And the President isn’t alone. GM has been negotiating with the UAW and bondholders for months, without resolution.
The President’s press office has indicated that he will support additional funds for ailing automakers, when he addresses the country on Monday. Wagoner’s 31-year career appears to be at an end. Whether federal funding will help GM reach its 102nd anniversary remains to be seen, however. If buyer trends are any indicator, it may not be long before GM is split up, reorganized, or takes a long dirt nap. Wagoner, who has managed an $82 billion loss during the past six years was quoted in 2002 about the future of the company. He said, “It’s time to stop whining and play the game.” Unfortunately, for a growing number of Americans, it appears to be game over.