Tarpley & Underwood
Financial Advisors, LLC
GM Files for Bankruptcy.
It finally happens. What does it mean?
Could the GM bankruptcy be as quick as Chrysler’s? So everyone hopes. It appears Chrysler might be out of bankruptcy this summer, if Fiat purchases the bulk of its assets as planned. Of course, Chrysler has a buyer. GM is trying to restructure without a buyer – and with a lot of help from Washington and Ottawa. The U.S. government has loaned GM $19.4 billion and could commit up to $30 billion more. The Canadian federal government and the Ontario provincial government are collectively directing $9.5 billion to GM.1
What might the new GM look like? As widely discussed, GM will likely restructure itself around its strongest assets and liquidate or sell the rest. Pontiac is out of the picture, and Saturn may be out of the picture also if GM can’t get a buyer. Saab has a for-sale tag on it. Hummer looks to have a buyer, and most of Opel is supposed to be sold to a Canadian supplier (Magna) and a Russian car maker (GAZ). Any fuel-efficient vehicles aside, GM’s days of dominance appear long gone. In fact, the forecasting firm IHS Global Insight thinks that the new GM will be about a third smaller, and capture only about 15-16% North American market share in the next few years.6
Source: The Wall Street Journal, July 2008
These are the views of Peter Montoya Inc., not Tarpley & Underwood Financial Advisors, LLC, and should not be construed as investment advice. Tarpley & Underwood Financial Advisors, LLC does not provide tax or legal advice. All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy. The publisher is not engaged in rendering legal, accounting or other professional services. If other expert assistance is needed, the reader is advised to engage the services of a competent professional. Please consult your Financial Advisor for further information.
Citations.
1usatoday.com/money/autos/2009-06-01-gm-bankruptcy_N.htm?loc=interstitialskip [6/1/09]
2 reuters.com/article/domesticNews/idUSTRE55043Y20090601
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[6/1/09]3 smartmoney.com[6/1/09]
[6/1/09]4 nytimes.com/2009/06/02/business/02primer.html?ref=business[6/1/09]
[6/1/09]5detnews.com/article/20090601/AUTO01/906010376/1361/Oakland-County-staggered-by-an-estimated-6-600-GM-job-losses[6/1/09]
[6/1/09]6 popularmechanics.com/automotive/new_cars/4319666.html[6/1/09]
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