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GM spits green into red sea: Sells stake in Suzuki

Peter Cohan — Mon, 17 Nov 2008 14:09:00 EST

General Motors Corp. (NYSE: GM) needs $2 billion a month to operate. It just made a token gesture to raise some of that capital on its own. But it amounts to very little -- sort of like spitting green into a sea of red ink.

How so? GM will sell a 3.02% stake in Suzuki worth $230 million. That amounts to 4% of the $6 billion that GM needs to operate every quarter. Now the estimated cost to the government of GM's failure has spiked to $200 billion.

This just goes to show you what a good negotiator GM is. If you owe the bank $1,000 and can't repay, it's your problem. But if you owe $200 billion, it's the bank's problem. Since banks can't afford to bail out GM, us taxpayers have become GM's bank. Where was GM's board while its current CEO drove the stock down 95%? Too late now.

Peter Cohan is President of Peter S. Cohan & Associates. He also teaches management at Babson College and edits The Cohan Letter. He has no financial interest in GM securities.

GM spits green into red sea: Sells stake in Suzuki originally appeared on BloggingStocks on Mon, 17 Nov 2008 14:09:00 EST. Please see our terms for use of feeds.

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Suzuki Motor vows to hold Indian market share forever

Brian White — Thu, 06 Dec 2007 16:46:00 EST

Filed under: Industry, Competitive Strategy, India

With both Toyota Motor (NYSE: TM) and General Motors (NYSE: GM) saying that India is a prime market for future sales, one of the incumbent automakers is saying not so fast. Suzuki Motor Co. of Japan said this week that it firmly intends to keep 50% of the Indian consumer vehicle market "for eternity." Those are pretty strong words, yes?

In that rather long-in-the-tooth announcement, the head of the Japanese automaker said that Suzuki would bolster dealer numbers in that country along with enhancing its auto lineup soon to compete with the likes of new competitors to the region. Suzuki CEO Osamu Suzuki said that, "We can't let newcomers break our 50 percent share that easily. We're going to do everything we can to keep that level for eternity." Suzuki is Japan's largest producer of compact cars, and currently has a little above 50% of the Indian automotive market share.

Suzuki may be able to defend its title also, as it sold more compact cars in India during the first half of 2007 than in Japan -- which is considered a dazzling success. Suzuki, though, will have larger global automotive forces to reckon with in the next few years as bigger auto heavyweights move into the area trying to capitalize on growth in the consumer Indian market.

CEO Suzuki said he was "grateful" for the fierce competition, although he's probably sweating in his boots, which -- at his age of 77 -- could just be an intimidation tactic to other automotive CEOs who dare try to take his market share away.

Suzuki Motor vows to hold Indian market share forever originally appeared on BloggingStocks on Thu, 06 Dec 2007 16:46:00 EST. Please see our terms for use of feeds.

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Harley-Davidson courting Ducati?

Tom Barlow — Tue, 12 Jun 2007 12:26:00 EST

Filed under: Deals, Rumors, Competitive Strategy, Harley-Davidson (HOG)

The Financial Times' Heather West reported today that Bologna, Italy-based Ducati Motor Holdings (NYSE:DMH) would be receptive to a rumored merger with Harley-Davidson (NYSE:HOG).

I find this rumor intriguing. As I wrote recently, H-D has been unsuccessful to date with its Buell brand in establishing a presence in the sport (road racing) bike market, which skews demographically to a younger rider. While Ducati's world-wide sales are minuscule compared to the big four Japanese brands (Honda (NYSE:HMC), Yamaha (OTC:YAMHF), Kawasaki,(OTC:KWHIY), and Suzuki (OTC:SZKMF)) none can match their road racing success, history and reputation for technical excellence.

For example, Ducati has long dominated the World Superbike Championship, motorcycling's version of Formula One racing. Like Ferrari, they are known for technical innovation and cutting-edge performance.

The company's financial status has been unsettled for years. The Texas Pacific Group bought 100% of the company in 1996-98, but has since sold all its shares, mostly to Italian investors. While Ducati appears to have righted the boat in 2006, despite a decline in units sold, the company carries a debt load that will have to be factored into any takeover. It also faces negotiation of a new union contract this year, always a concern for Italian companies. They recently filed to delist from the NYSE, citing cost considerations.

If H-D can make the numbers work, I can see a number of pluses in such a deal. Certainly its dealer network would welcome such an appealing addition to its product line. It could also leverage its existing distribution network, and perhaps manufacturing, to reduce operating costs. Ducati primarily markets its brand through its racing program, which would give H-D exposure where it currently has none.

There is no sexier name in motorcycling than Ducati, and I wouldn't be surprised to see such a deal go into negotiation.

Harley-Davidson courting Ducati? originally appeared on BloggingStocks on Tue, 12 Jun 2007 12:26:00 EST. Please see our terms for use of feeds.

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