Kirk Kerkorian, the billionaire who owns a stake of about 10% in General Motors, wants the company to explore a partnership with Renault SA and Nissan Motor Co. (which is 44%-owned by Renault).
Story here, text of letter to GM Chief Executive Rick Wagoner here.
Here is my prediction, which anyone here can shove in my face if it doesn’t come true:
GM will be gone by the end of 2010.
It will probably go into Chapter 11 by 2007, which is usually enough to keep a company alive in a zombie-like state for many years, but the debt load and lack of cash flow from operations will force a liquidation by the end of the decade.
I think Ford can hold out longer and be given a big boost by GM’s demise.
But here is what will happen when GM finally gives up the ghost. First off, it won’t just disappear. Rather, everything will be sold off: plants, tooling, land, financing divisions, subsidiaries, and BRANDS and TRADEMARKS.
Just as Jeep was sold to Chrysler when AMC went under because it was perceived as a valuable brand, certain GM brands will survive. My predictions:
Chevrolet. Definitely a survivor. It’s the quintessential American car brand, and someone is going to snap this puppy up vigorously.
Cadillac. Another winner, as it has such cache and history as a luxury brand. I could see this being snapped up by an Asian maker without a major luxury brand: Subaru, Hyundai, Daewoo, or a Chinese co.
Saab. Could go to private equity, be acquired quasi-governmentally by Sweden, or simply snapped up by an Asian maker. Will survive.
Hummer. I see see this as going to private equity or being purchsed by an Asian maker or even Ford.
Pontiac. Perhaps a 50/50 chance of survival. The brand has history and some classic marques (GTO, Firebird, etc.), but most makers already have well-established pony car brands. Someone will definitely snap up the brand, but whether they’ll do anything with it of substance is another matter.
Buick. Perhaps a 20% chance of survival. Just not a brand that has had much inspiration in the last few decades. It’s intentionally sub-Cadillac in terms of luxury appeal, and since its heydey the Big Three (Toyota, Nissan, and Honda, hah!) have built extremely strong luxury marques. Probably a buh-bye.
Now for some real doom and gloom.
GMC. Too many trucks and SUVs out there. Tooling sold, brand gone!
Saturn. Gone! This was always a Japanese wanna-be. According to what I heard on NPR recently, they never really realized Japanese-style efficiencies and quality in production, and the experiment is basically a failure. It’s also pretty useless as a brand. Although they sold the “quality” and “caring” aspect of the company (or division or whatever it is) pretty well back in the day, the products themselves have never really had a distinctive and intelligible positioning.
At the end of the day, the demise of GM will be a great thing for the American auto industry and the US economy. Here are the reasons:
It will free up the assets of GM so that they can be used productively. Currently they are attached to unsustainable contracts and pension obligations.
It will free up the GM workforce so that they can go to work for truly excellent and growing companies. They will be better in the long run.
It will free up GM brands so that they can flourish once again.
It will free up divisions like Hummer and Saab which should have been independent anyway.
Currently much of GM market share is gained from sweet financial deals, not vehicle quality or excellence. By returning that share or much of it to the market, the remaining competitors can compete based on quality and not on suicidal vehicle financing.
It could allow a new US company to arise, using GM brands and assets or not, to pursue a new American dream of vehicle and corporat excellence, which GM has failed to fulfill.
I can’t wait for that day.
Subaru is controlled by Toyota, who owns a large stake in Subar’s parent company, Fuji Heavy Industries. The company formerly know as Daewoo doesn’t even exist any more. The car division of Daewoo is currently owned by GM.
No one seems to have mentioned the small fact that GM is doing EXTREMELY well in China, replacing VW as the top selling foreign auto-maker in China not too long ago. the Buick Marque, of all things, is leading the charge there. When I visited earlier this year, Buick Regals were the quitissensial status symbol for the Noveu Riche and in the eyes of Chinese consumers, Cadillac and Buick are FAR better known and loved brands than anything the Japanese have there. The “American cars == Crap” meme had never set foot over there.
Well, I did know that GM was really looking to make a foothold in China. You think that getting in there early in China is going to save GM’s almost apparent bankruptcy?
IIRC 50% of global profits comes from the GM operations in China.
If GM declares Chapter 11, I think that Ford could very likely be right behind them, arguing that GM’s Chapter 11 filing gives GM an unfair competitive advantage given that they now have a fair amount of protections from creditors that Ford doesn’t have.
Renault and Nissan willing to talk to GM over the matter.
Note, however, that Nissan’s sales re down 19%.
Case in point: K-Mart, which has been lumbering around groaning “BRAAAAAIIIINNNS” and farting dirt out of its rear orifice since I was in kindergarten (I’m 32). Not only are they still around after 25+ years of supposed dire straits, didn’t they just* buy* Sears Roebuck?