General Motors: From Making History to Becoming History ?

8 07 2008

The venerable General Motors, the largest automobile company in the world is having the toughest year in its 100-year history. The stocks of GM are trading at a 54-year low.  The market capitalization of this 181 billion USD company is just 5.73 billion USD. Yes, less than 6 billion USD!

 

Bond markets have already reduced  GM bonds to the junk bond status.

 

As someone who grew up studying how GM had developed and put in practice so many stellar ideas of business management, I can not but feel sad about the state of affairs in this legendary company. May Rick Wagoner get all the support needed to pull GM out from the brink of bankruptcy.

 

– G. Mohan.

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2 responses

8 07 2008
Venkat Subramaniam

It is difficult to imagine the impact on the US economy and its effect on the rest of the world, if a collosus like GM folds up. The impact will not only be on GM but also on the large number of component suppliers of GM and the other stakeholders in the supply chain.

Toyota has positioned its brands very well, across the various customer segments, countries and price points, as compared to GM; not to mention the legendary supply chain optimisation and lean management practices pioneered by Toyota.

We really hope that GM will dig into its rich legacy of management experience to pull itself out of these difficult times.

12 11 2008
G.Mohan

GM currently trades at an all time low of $ 3.02. Deutsche Bank Analyst has given a price target of zero for GM. Bloomberg reports that :

“Even if GM succeeds in averting a bankruptcy, we believe that the company’s future path is likely to be bankruptcy- like,” Deutsche Bank’s Rod Lache wrote today in a research note. The New York analyst lowered his recommendation on the shares to “sell” from “hold.”

The decline shows mounting pessimism that a turnaround will succeed at the largest U.S. automaker amid the credit crisis and the worst sales market in at least 15 years. GM is petitioning the U.S. government for funds after reporting a cash burn last quarter almost twice as large as in the second quarter.

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