General Motors (NYSE: GM) has been saying for months that bankruptcy is not an option and in fact, not even a possibility. Of course most of us knew they were lying, but now they appear to be on the brink of finally admitting that.
The Treasury Department believes that GM needs at least $5 billion more to keep operating into the second quarter, and GM is reportedly poised to present two options: Either give us more cash now, or put us into bankruptcy and provide the debtor-in-possession financing.
The Wall Street Journal reports (subscription required) on the details surrounding the viability plan the company is theoretically required to present to lawmakers on Tuesday. Bankruptcy might not be a politically viable plan, but it probably is the best option. By not forcing the company to file as a condition of the bailout, the federal government has already wasted enormous sums of money on debt service and bloated contracts that could have been reduced under a bankruptcy filing.
If GM is going to file for bankruptcy eventually -- which it is -- the sooner the better. With the size of the company's debt load, every day that goes by without a filing is cash out the door.
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Reader Comments (Page 1 of 1)
2-14-2009 @ 3:09PM
A said...
No wonder GM is going broke poor customer service at dealers is their first mistake,unhappy customers with your product will either make it swim or sink.
who wants to spend more time in the shop being raped for repairs when they can buy a vehicle that runs great from the start and for years to come.
2-14-2009 @ 3:24PM
moonie said...
Recently my ex took her cavalier in to a major GM dealer penski's up on the northside of Indianapolis.The car was leaking power steering fluid i saw power steering fluid on the ground where it had leaked, however i didn't work on it because i didn't have the right tools. Anyway they said the power steering pump was bad and it would cost $600 plus to repair. So my ex took it to an independant repair shop instead that a friend recommended to be honest for another estimate and they said all it needed was the main power steering hose and that the pump was fine. They repaired it for $135 plus labor and it's working fine now and fixed.Beware of major auto dealer repair shops they will cheat you because the car business is way down.
2-14-2009 @ 5:35PM
Bob Olear said...
I can tell you horror stories from 2 dealers in Lockport N.Y. 1st Chevrolet- Took 3 car tows and dealer having the car for almost 3 month plus over $500. in costs, cleaned gas tank, removed parts to find its only a fuel sock. Same dealer just after the warranty was up, told my son it would cost over $2,000 to have all the wiring replaced-salt damage- baloney- it was a car from a flood down south. Buick- besides numerous problems- latest --69,000 miles and the transmission is going on all country driving- cost over $2,200.- local transmission shops price- $1,000-$1,200- Crooked dealers- I agree with others. Why buy a American car.
2-14-2009 @ 7:06PM
jkellock7016 said...
Somehow I'm not surprised. The lawyers (300+/_ and counting) have figured out that avoiding taxes is not enough. Now they will play the bailout game, a new game in town where there are no rules..make it up as you go.... fight the legals later. It's always easier the do some thig and then apologize later , than not to do whatever you want, and let" the chips fall where they may)
2-14-2009 @ 8:44PM
william lindblad said...
I do not have the foggiest idea as to what relationship a manufacturer has to a dealership, other than they are a franchise.
GM, nor any other maker, does not control the dealer, nor their repair facility. Honesty and it's opposite lurk in all phases of repair.
To anyone that thinks that the auto repair segment is alone in this area - you have no idea what is going on. That is my entire point. Lets say your house A/C unit quits and you call repair. They tell you that your compressor is shot. Do you call someone else? Unless you are savvy, have a fluke meter or equiv. and know how to check resistance, you are never going to know it was a 40 buck relay. It is in all of the skilled trades. Most are honest, but not all.
Back to the blog - To all the unknowing, when GM goes, so does what is left of the economy. It is not only GM, Ford and Chrysler, it is the supply system that is built around them. It is all of the small business that depends on the auto industry and the suppliers. Kids, it's monumental. If you want to find out first hand what 1930 was like than do support this foolishness. We are already headed in this direction, but like all of our eventual death, there is no good reason to be in a hurry.
Zac, if you believe that a declaration of bankruptcy would be economically beneficial, I do hope that you also know what the letters A.H. stand for, because it fits. Further, as you are a blogger on an economic page, I tink you should do some homework. (tink as in Arte Johnson)
2-15-2009 @ 9:50AM
David D. said...
You all have horror stories about the dealerships. Avoid that dealership for service until they improve. However, I own a 2003 Chevy Impala and it has never been to the dealership for any issues that we all call Warranty work. 80K miles and nothing. GM is making great cars and trucks. I also own a 2006 Chevy Trailblazer with 38K miles and it too has not seen the insides of a dealers service bay for any warranty work. So folks. Buy Chevrolet and other GM products from a better dealership. We need GM in our community to keep good jobs and workers who actually pay taxes.
2-16-2009 @ 1:06PM
Darlene B. said...
Wake up foreign car lovers. GM is vital to the overall economy everywhere. GM cars are made as good, if not better, than foreign cars. So many of you have been brainwashed. I drive a 2002 Chevy Trailblazer with 60,000 miles on it. Never has my car needed anything except an oil change every 3000 miles and a new set of tires. It is not that GM cars are the only cars not selling, it is all cars. Check the newspaper and you will see foreign cars listed for sale more so than GM cars. Accept the facts and support your US made cars.
2-15-2009 @ 6:29PM
william lindblad said...
David, you are correct. I also have a 2003 impala. It is pushing 100,000 and the only item that has broken so far was a wheel bearing. Cars, planes & trains are all mechanical devices and hence, they all experience friction, therefore they all wear out. Duesenberg said " If you keep a car in fresh oil and grease it will last forever". While not true, he did make a point.
Somehow I think that I was the only one so far that really stayed with the blog. I think that the intent was whether the manufacturer should fail in bankruptcy?
Just some that are no longer here.
Packard, Studebaker, Nash, Kaiser, Crosley, AMC, Hudson, and all of these are after WWII. I guess they all had quality problems too. Some did, but that is not the main reason for their demise. I guess we can include U.S. Steel, Bethlehem Steel, all of the small garment makers and even down to brooms and brushes. We Don't make TV's. We don't even make clothing.
What do we do if the entire world goes to the D word? Everything is going to be close to stop. Anyone think that I pulling your leg - come back in August.
2-16-2009 @ 2:52AM
Bob Olear said...
First of all its a car family from the factory to the dealer. You buy a car mostly from a dealer near you for good and fair service which is not happening- OK- so the dealers are making customers unhappy with high prices and poor work. My family has bought 3 new cars in Lockport, N.Y.- Everytime a expensive repair comes about- my sevice man at Buick comes up with the same excuse- The weather caused it. "BALONEY"They just keep you going until the warranty runs out. On my Buick in 6 weeks 3 sensors went- 1st the Air Bag- about $400. 3 weeks later- ABS- another big bill plus $80.for diganostic tests each sensor- 2 weeks later ABS again- I said you just fixed it- ans- its the other now. Same dealer- my wife`s new car- the heavy door is out of linement- air comes in- 3 times and its still goes out of line- they said my wife doesn` know how to open the door.
Called General Motors and complained on my transmission going and the dealers cost of over $2,200- You know what- they indicated they would go half- and for me to take it into the dealer right away- I checked several transmission shops and it was $1,000-$1,200. Why didn`t GM say they would cover half if I took it to another shop -Why did it have to be a Buick dealer which was $1,000 more. I went in for a oil change- they said my break linings were done to the bone- How much I asked- $425. I said forget it- On my way out the door the manager said but we can put in new pads for $100. People no longer trust their dealer- they used to say fix it. OK- Some of you guys out there have no problems- "Lucky You"
2-16-2009 @ 11:01AM
STELLADILLOW said...
WHY SHOULD WE THROW AWAY MORE MONEY ON GM. LET IT GO NOW, WE LET BANKS GO SO LET GM FOLLOW THEM
2-16-2009 @ 10:45AM
vicki kendall said...
I have owned good and bad, foreign and domestic (over 45 cars). Now my mercedes dealer is pulling the old tricks that drove me into the foreign market, ..phoney repairs. Any dealer needs to make a certain amount per hour per bay...and if you are the sucker who lets them touch your car...they never repair anything...they replace parts...to do a $2 repair on my window, I was quoted $800. a small bent piece. My son fixed it for $2. Mercedes. Otherwise a great car, and the same is true for GM, Ford and Chrysler...great cars, but dishonest dealers gouging you on repairs.
2-17-2009 @ 10:16AM
adam hartung said...
When will we realize that the people that caused the auto crisis cannot create a solution? New leadership is a requirement, not an option. If management won't resign, we must replace them in order to create Disruptions and a new solution making the American companies viable again. Read more at http://www.ThePhoenixPrinciple.com