GM Bankruptcy and the Changing US Automotive Industry

Yesterday General Motors officially entered Chapter 11 Bankruptcy protection – which came as no surprise to anyone.  After having a day or so to digest the facts, I’m very saddened by what the US automotive industry has come to.  When Government Motors ( the new name? ) emerges from bankruptcy, the United States government will own a whopping 60% of the new company.  At what a price, though.  Already, the US has “loaned” $19 billion to GM.  The loans, of course, are really just bailout money in disguise. 

But wait, there is more

Over the course of GM’s bankruptcy, the US is expected to flush another $30 billion down the GM money toilet.  That brings the total “investment” in GM to a whopping $49 billion.  This is all money that the US taxpayers will never see again, as GM has no hopes of ever paying it back, barring a miracle of some sort.

Chrysler beat GM into Chapter 11 by a few weeks, and is even more of a mess.  Once the sale of the “Good Chrysler” goes through, the UAW will own the bulk of the company, with Fiat and the US owning minority stakes. 

Ford marches on, unaided

To date, Ford Motor Company is the only major US automaker to survive without federal bailout money, and without bankruptcy protection.  In the coming months, I expect Ford to drastically increase its market share.  There are plenty of folks who want to continue to Buy American and support our manufacturing base.  However, plenty of these folks won’t consider buying from a bankrupt automaker – that leaves Ford as the only choice.  It’s either that, or buy one of them ‘foreign cars. 

If you were in the market for an American car – would you consider Government Motors, Chrysler, or Ford?  Why?

Published on June 2, 2009 in Chrysler,Ford,GM

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