Forbes: GM headed for bankruptcy, again

by NW Spotlight

Louis Woodhill, writing in Forbes, predicts that GM is headed for another bankruptcy within the next four years, given current trends. While campaigning, President Obama has been touting his bailout of GM (with its unionized UAW workforce) as one of his accomplishments. Even the left-leaning Huffington Post acknowledges Obama’s claims about the auto bailouts are exaggerated, and the Huffington Post notes GM “still owes taxpayers a whopping $25 billion. Chrysler, for its part, has repaid most of its federal loans.”

The U.S. government owns 1/4 of the shares in GM – half a billion shares – and shares would need to be at $53/share for the government to break even on the bailout. GM shares closed at $23/share yesterday.

2013 Chevy Malibu redesign

Woodhill, writing in Forbes, uses the Chevy Malibu to illustrate the problems GM is having. The Malibu is in a critical market segment, the “D-segment”, which is the highest volume single vehicle class in the U.S. The Forbes article notes “it is difficult to imagine how GM could survive long term unless it can profitably develop, manufacture, and market a vehicle that can hold its own in the D-Segment”.

GM is working on a totally redesigned 2013 Chevy Malibu, and it will be competing with other cars in the same class that have also been totally redesigned like the Honda Accord and Toyota Camry.

With redesigns, the Forbes article notes “it had better be superior to the older models being offered by its competitors.  If it is not, the company will spend the next five years (the usual time between major redesigns in this segment) losing market share and/or offering costly ‘incentives’ to ‘move the metal’. Uh-oh.  At this point, it appears that the 2013 Malibu is not only inferior to the 2012 Volkswagen Passat, it’s not even as good as the car it replaces, the 2012 Chevy Malibu.”

The article also talks about the failure of even the 2013 Malibu Eco, with a “mild hybrid powertrain.” “The Malibu Eco (25 MPG City/37 MPG Hwy) is not as fuel-efficient as the conventionally-powered 2013 Nissan Altima (27 MPG City/38 MPG Hwy).”