PROJECT 2000:

 

The Rise and Fall of Oldsmobile, a Division of General Motors.  

 

 

 

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    Recent Headline News featuring GM's problems:

  •  Sales Wilt in July - It's a First: Detroit 3 Market Share Dips Below 50%, Richard Truett & John K. Teahen Jr., Automotive News, 8/1/07.  For U.S. Automakers, July was the darkest month in the 102-year history of the automobile business in the United States.  For the first time, foreign manufacturers controlled the market.  General Motors was down 22.3 % July'07 vs. July'06 (GM is also down 9.4% the 1st 7 months in 2007 vs. 2006). 

    GM had almost no bright spots, and no indication that August will be any better than July.  Paul Ballew, GM's executive director of market and industry analysis, said, "We didn't have a terrific retail month for sure, but it's better than June."

     

  •  General Motors, Toyota Swap Lead in Global Market, Harumi Ozawa, YAHOO! FINANCE 7/20/07.  ...it's (GM's) Japanese rival came out on top for the first half of the year.  Toyota beat GM for the first six months to (through) June as a whole, selling 4.71 million units against GM's 4.67 million units. 

    An auto analyst at Fitch Ratings, Tatsuya Mizuno, said, "It was inevitable the U.S. automaker would hand over its crown to Toyota at the end of 2007, ending GM's 76-year reign as the world's best-selling automaker."

     

  •  Wake-Up Call: Toyota Outsells GM, Tom Nemet, Automotive News, 7/2/07. What is the meaning of Toyota Motor Corp. outselling General Motors worldwide in the first quarter of this year? Although purely a commercial matter, those developments have hurt U.S. prestige worldwide.

 

  •   Market Concerns Shroud Ford/GM as Union Talks Loom, Reuters/Detroit, 7/19/07.  Andrew Wilkinson, Senior Analyst at Interactive Brokers Group, noted that implied volatility of 41% for GM options earlier this week was the highest reading, "since February when shares tumbled when the Tracinda Group threw in their cards and left the poker table."  Billionaire Kirk Kerkorian's investment arm, Tracinda Group, sold its stake in GM last year following the automaker's rejection of his proposed tie-up with Nissan-Renault.  Implied volatility can be read as a % measure of how much stock is expected to move in a rolling 12-month period.  Brian Overby, an options analyst with TradeKing, said the large number of outstanding put options in GM and Ford...shows that "the options market is worried about the long-term aspects of both."...indicative prices point to a roughly 32% default risk for GM. 

 

  •  Ghosn: No Desire to Run GM, David Guilford, Automotive News, 7/13/06.  GM's board last week approved exploratory talks on a three-way alliance with Nissan and Renault, increasing the pressure on GM's (CEO) Wagoner at a crucial point in the automaker's turnaround. 
     

 

  •  How can Rick keep Kirk (Kerkorian) at bay?  Be like Carlos (Ghosn: CEO of Nissan/Renault), Charles Child, Automotive News, 7/12/06.  GM critics, insiders and outsiders, complain that the company's culture lacks accountability. (GM) Executives are rarely broomed for poor performance, even though they have collectively dribbled away 6.8 percentage points of U.S. market share in the last 10 years.  If he (Rick Wagoner) stated Ghosn-like goals and met them, he could tell Kerkorian (who controls 9.9% of GM stock) to back off -- with the support of GM's board.  Wagoner would have to lay his GM career on the line. But it already is.
     

 

  •  Chief Named for Troubled G.M. Unit, N.Y. Times, 5/31/06.  Troy Clarke will take over as President of G.M. North America on July 1.  His job is to regain the market share that the world's largest automaker has surrendered to foreign competitors.  G.M., which held about 28% of the American market in 2002, ended April with 23%.

 

  •  Is Flint's past a blueprint for GM's future?  Edward Lapham, Automotive News, reported on 5/4/06 that "Delphi, GM and the UAW are nearing crunch time.  Before you know it, U.S. Bankruptcy Judge Robert Drain could rule on Delphi's motion to void its labor agreements.  And if Judge Drain tosses the contracts, the UAW and other unions that represent Delphi workers may well strike.  This in turn could trigger...GM running for the cover of Chapter 11."

 

  •  General Motors on Thursday (4/20/06) posted its 6th straight quarterly loss, reported Automotive News.  Excluding a $1 Billion health-care restructuring charge, GM reported a loss of $323 Million (in 1Q'06).

 

  •  "GM Posts Worst Loss Since 1992"  General Motors LOST $10.6 BILLION in 2005!  NY Times 1/27/06

 

  • "What's next for GM workers?"  With GM cutting 30,000 hourly jobs (representing 22% of GM's union workforce in the U.S.) and at least 2,500 salaried positions (in the U.S. with additional cuts in Canada as well), thousands of workers at the automaker face an uncertain future.  CNN/Money, Jeanne Sahadi, 11/25/05

 

  •  "GM's big shakeup"  General Motors Corp. said...it would close or scale back operations at about a dozen U.S. and Canadian locations in a bid to...halt huge losses in its core North American auto operations.  CNN/Money, Chris Isidore, Nov. 21, 2005

                                                                   

             One Dozen GM Plants Closing!

 

 

  •  "GM's perfect storm"  The Delphi bankruptcy raised the risk of a bankruptcy filing at GM within the next two years to 30 percent, according to a note by Banc of America Securities auto analyst Ron Tadross in October.  He's since raised that estimate to 40 percent and now says that a filing at some point is "inevitable."  CNN/Money, Chris Isidore, Nov. 18, 2005

           GM's Bankruptcy chances raised to 40% per analyst!

 

 

  •  GM has seen its slice of U.S. VEHICLE SALES slide to 23% (as of April, 2006) over the last 30 years.

      GM's U.S. MARKET SHARE has declined by 47% versus GM's market share of 43.8% in 1980.

                                                                  

                                                        CNN/Money, Chris Isidore, Nov. 18, 2005

      

 

  •  "Pressure Mounts for GM's Rick Wagoner"  This year alone, the carmaker has lost...record billions, shocked investors with earnings restatements, seen its stock plunge to new lows, come under investigation by federal regulators and given up significant U.S. market share to foreign rivals.

        GM shares, which have lost more than 46 percent of their value this year, spiraled to an 18-year low. 

        Amid company losses, Delphi crisis and stock woes, analysts say CEO may be on the way out. 

        CNN/Money, November 16, 2005

                                                                   

                                                                    GM CEO Rick Wagoner detailed the

                                                                                                      company's job-cut plans but declined

                                                                                                      to say when the troubled automaker

                                                                                                       might return to profitability.

 

                     GM lost $10.6 Billion in 2005!

 

 

  •  "ABC NIGHTLINE: ABC NEWS" Ted Koppel (ABC News), "At the end of 1997, General Motors had a total of 8,653 dealerships around the country.  By the end of 2004 (in 7 short years), the total number of GM dealerships around the country had actually gone down by more than 1,000."   ABC News, Nightline,  11/15/05              

            

                                           GM dealerships decreased by 1,000 !!!

                                                                                                                                                         

  •  "SEC subpoenas GM"  General Motors Corp. confirmed...that the Securities and Exchange Commission (SEC) has subpoenaed records from it about its accounting practices, creating further headaches for the already embattled automaker.  CNN/Money, Chris Isidore, Oct. 26, 2005

 

 

  •  "GMAC Financial Services Will Sell Up to $55 Billion in Auto Loans"  General Motors Corp.'s GMAC financial services unit said...it will sell up to $55 billion worth of U.S. auto loans to Bank of America Corp. over the next five years in a deal to raise cash...

    GMAC was hurt...when Standard & Poor's Ratings Services and Fitch Ratings downgraded both GM and GMAC's debt to "junk" status, increasing borrowing costs.

    GMAC selling $55 BILLION in loans to raise cash!

     DEE-ANN DURBIN AP Auto Writer, The Associated PressThe Associated Press, DETROIT, Oct 17, 2005

 

  •  Jamie LaReau of the Automotive News reported on April 3rd, 2006 that the first phase of the GMAC sell-off has begun. General Motors sold 51% of its its stake in GMAC, which equated to $14 Billion, "in an effort to turn (GM) around."    

                                                                 

  •  "GM to sell stake in Isuzu for $300 Million" - Automotive News reported on April 11, 2006 that General Motors will sell its 7.9% stake in Japanese truck maker Isuzu Motors Ltd. for $300 Million, unraveling a 35 year equity alliance to raise much-needed cash to revive its ailing business.     

 

  •  "GM CEO won't rule out closing European plant" - Automotive News, 4/21/06.  General Motors Corp. can not rule out eventually closing one of the three European plants that make the Opel Astra Model.  

 

  •  "Next GM worry: Disappearing dividend" Analysts, union push automaker to stop paying $1.1B on shares.  But will that sink stocks further?  Among the dark clouds hanging over General Motors' stock, add this question: How much of its already battered value is dependent on a dividend that few expect to continue at its current level? 

           ...GM's Stock Price has FALLEN about 50% in last 5 months! 

            GM's STOCK direction is going the

     

      "Some of the dividend mutual funds will likely have to sell their GM shares soon," says a former auto analyst,

      Josh Peters, also the editor of Morningstar Dividend Investor, a newsletter for the mutual fund tracking service.

      Peters adds, "That eliminating the dividend will be another signal to investors about how little importance

      they have among GM decision makers."  CNN/Money, Chris Isidore, Nov. 23, 2005

 

  •  "Toyota thrives while rivals suffer" -

        The U.S. auto industry's slump hit GM hard in March, when the struggling automaker's sales fell almost 15%, 

        while rival Toyota reported its highest monthly sales yet.  Toyota's sales rose by 7% for the month!      

        DEE-ANN DURBIN AP Auto Writer, The Associated PressThe Associated Press, DETROIT, April 4, 2006

 

  •  "GM Canada sales slip in May, while Toyota gains" -

        General Motors of Canada saw its sales slip in May, while Toyota Canada gained further market share,

        breaking its sales records for a second straight month.   Toronto (Reuters), June 2, 2006

                                          

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  •  "ABC NIGHTLINE: ABC NEWS"  Ricardo Sanchez (former GM dealership owner) says, "I'm probably out at least a million dollars (because of the partnership with GM)."  William Adkins (former Chevrolet dealership owner) says, "They (GM) damaged and destroyed a lot of people's lives."  ABC News, Nightline, 11/15/05

 

  •  "ABC NIGHTLINE: ABC NEWS"  Dave Marash (ABC News): "Several dealers are suing General Motors because...too much control often executed with too little concern for the dealer's interest."  "...GM failed to back up their dealer when trouble surfaced."  ABC News, Nightline, November 15, 2005

 

  •  "ABC NIGHTLINE: ABC NEWS"  Dave Marash (ABC News): "Demetrius Patterson (reporter) broke the story of GM's troubles with its minority dealers in the regional chain of Gannett's Westchester County, New York, newspapers.  Patterson says his story caused problems at Gannett.  His evidence, this national story never made it to Gannett's national wire.  And he adds he was pulled from the GM story.  And when he objected to the reassignment, he says he got warnings from executives at both Gannett and GM.  One GM executive told him the fable of a gnat bothering the backside of an elephant." 

          Demetrius Patterson (reporter) quotes what one GM executive told him (Dave Marash of ABC states that, "GM officials confirm this conversation did take place"): "When the elephant gets tired of that gnat, the elephant will sit down and squash that gnat.  And he said to me, 'Demetrius, you should think of General Motors as an elephant and yourself as a gnat.' "   ABC News, Nightline, November 15, 2005

American business is people, the abuse of whom leads to collapse of business itself.

copyright 2005