General Motors (NYSE: GM) is rumored to be considering the shuttering of its GMC unit as part of its effort to restructure and secure additional public funding.
But now GM executives are telling BusinessWeek that the GMC unit will survive the paring because 1.) It's one of the company's profitable units and 2.) Consumer research shows that absent a GMC line of trucks, most consumers would head over to Ford (NYSE: F) instead of GM's relatively inexpensive Chevrolet line.
Even if they did buy Chevrolet's instead, the margins are higher on GMC vehicles. GMC buyers tend to add on more luxury upgrades
Given all this, it seems that the GM honchos arguing to keep GMC have the upper hand. GM has so many money-losing operations that it doesn't make sense to jettison one that is profitable. On the other hand, GMC's strong brand could make it a good target for a strategic buyer with a lower cost structure and more competent managers: The brand could be worth more to someone else than it is to GM.
As is, GM will try to cut costs by eliminating the brands that have no future. The problem with that is that the sales of those nameplates will likely generate very little value to pay back creditors.
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Reader Comments (Page 1 of 1)
4-24-2009 @ 3:23AM
Yon said...
GM is a dinosaur!
4-20-2009 @ 1:48PM
ij70 said...
If Greenies in Obama administration keep pushing, then GM might not have a choice, Greenies do not care that gmC is profitable.