Diary

Is GM toast?

No question about it according to this Atlantic article. This paragraph sums it up.

GM has burned through $13.4 billion in less than six months. What will $30 billion buy us? Another year, at best, with no signs of a turnaround in the market for cars. Autos, like other big consumer durables, are especially sensitive to downturns like this. There’s only so much food you can cut out of the budget, but you can certainly drive the 2001 Grand Caravan for another year.

Even if you decide you just need to can the old boat because it’s falling apart, would GM or Chrysler be anywhere on your list of dealers to visit? Even if they have a car you like and the price is right, are you going to buy it if you figure the company may shut down tomorrow? As to Chrysler, one of the comments to the article sums up my thought:

They should completely liquidate Chrysler. I think that’s what Cerebrus [sic] would do if they weren’t being bailed out. There’s nothing of value left there, from what I read.

Assuming it’s accurate, this article about inventories is scary.

Maker Days Supply of Inventory
GM 161
Chrysler 151
Honda 125
Ford 120
Toyota 91
Nissan 85
Hyundai 79
Industry target 60

So GM and Chrysler could quit building cars today and they wouldn’t run out until August – a month more of inventory than anyone else.

I half wonder if we shouldn’t pull the plug on GM and Chrysler and pump some money into Ford. At least they have a chance at surviving.