GM produces a viability plan

As required by Congress, GM submitted their Viability plan today.  Boy, oh, boy, is it a doozy.  I don’t know where to begin.  Here are a couple highlights:

  • An additional $16.6 billion line of credit ( bringing their total to a cool $30 million )
  • A decision on HUMMER by March 31
  • End of life for Saturn in 3 years
  • Requesting help from the Swedish government for Saab
  • Plan to press forward with Chevy, GMC, Buick, Cadillac, and Pontiac
  • Break-even is based on 11.5 – 12 million annual US car sales
  • Game over for UAW Jobs bank

Ok…… asking for more money isn’t a surprise, but the amount is still a shock.  And does anyone else notice that the changes don’t seem to go nearly far enough to produce a profitable company in the end?  Here’s what I would do intead.

Houston Cars’ viability plan for GM

  • I’ll stick with the huge line of credit – outrageous, but probably needed to keep things rolling.
  • Sale or closing of HUMMER within 60 days
  • Sale or closing of Saab within 60 days – Saab has never been profitable.  Nor will it ever be.
  • Sell remaining GMC inventory and retire the brand.  Every vehicle is a rebadged Chevy – there is no purpose for a separate brand.
  • Sell remaining Buick and Pontiac inventory, and retire brands.  Nearly every one of these models can be found elsewhere.  If the Lucerne is selling well, make it an entry level Cadillac.  The Solstice is ludicrously unprofitable.  The G8 would make a great Chevy – call it whatever you want, except this alphabet soup nonsense.
  • Focus on two core brands, like they should have done years ago.  Chevy and Cadillac continue on, alone.  An everyman brand, and a luxury brand.  There’s no room for in-between these days.
  • Cancel existing UAW contract in it’s entirety and renegotiate, with the assistance and oversight of government officials.
  • Find a way to make break-even come at around 10 million sales – anything above is gravy.

An easy plan?  Hell no.  But GM didn’t get broken overnight, or even over the course of a couple years.  It took decades.  The fix will be painful, but it must be decisive and powerful.  This is the only way GM can survive and once again become a profitable American company.

Published on February 17, 2009 in GM

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