GM SUV dinosaurs are a thing of the past

The New York Times has reported: The last Chevrolet Tahoe rolled off the line here in Janesville shortly after 7 a.m. in the 90-year-old plant, which had built more than 3.7 million big S.U.V.'s since the early 1990s. While the overall new vehicle market has dropped 16 percent so far this year, sales of big S.U.V.'s have plummeted 40 percent. Their closings leave the Big Three with only one factory each still devoted to making traditional big S.U.V.'s - Ford Motor (NYSE: F) in Kentucky, General Motors (NYSE: GM) in Texas, and Chrysler in Detroit.

The car manufacturers have been hit hard by tight consumer credit, the high cost of fuel and an overall slowing of the economy. All three manufacturers have been pleading with Congress and the White House for financial support and with the UAW for contract concessions. After Two of the three (Congress and UAW) failed to act, President Bush stepped in to provide an aid package of $17 billion to get the auto companies through the first quarter of 2009.

Despite the rescue package finally coming through Wall Street has not been impressed. The stocks of GM (NYSE: GM) and Ford (NYSE: F) are down 35% since the announcement. Ford closed yesterday at $2.19, down -0.40, losing -15.44% in one day. GM closed at $3.00, down -0.52, losing -14.77%.

Can either of these companies avoid bankruptcy if they cannot stay off the pink sheets? Is bankruptcy inevitable? Are you buying these stocks with hopes of a recovery?

It is simply a race against the clock. Interest rates and fuel prices have crashed, hopefully bringing some relief. While this may help consumers, homeowners, and companies with better balance sheets, will it be enough to sustain the American auto industry?

If Congress does not act they will fail. If we Americans do not support our own companies they will fail. If the UAW and the corporate management don't make tough compromises they will fail. And if everyone works together they might make it. Because Wall Street thinks that all this effort would assure nothing, the stocks are languishing.

I hope for everyone's sake the industry becomes a Phoenix, and unlike the SUVs and dinosaurs, can rise again.

Happy Holidays -- Health and Prosperity to all!

Sheldon Liber is the CEO of a small private investment company and the principal for design and research at an architecture & planning firm. He writes the columns Chasing Value and Serious Money. Disclosure: I do not own shares of GM or F

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Last updated: February 13, 2012: 08:51 AM

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