General Motors Co. has included the standard warnings for present and future investors in its 734-page filing to go public. This includes the many risks that GM faces in the industry like the stability of its supply base, weak sales figures, and changes in regulations to name a few. Of course, the risks that GM has disclosed almost paint the picture that the American automaker might just face bankruptcy in a year’s time.
The 734-page file also includes the state in which senior management is being paid an uncompetitive salary because of the limitations that comes from the government’s aid to the GM. There is also the matter of unhealthy financial controls inside the company the negative effects of GM’s deflating dealer body to its market share and sales in the U.S.
According to GM, the sales and market share will suffer when they decide to let go of several brands and cut down their U.S. dealer network. In 2009, there were approximately 5,600 GM dealers in the U.S. In June 2010, the figure goes down to 5,200. The initial plan was to cut down the dealerships by 3,600 to 4,000 in the long run that in 2009, the automaker has ended their franchise deals with over 2,000 dealers. But the new federal law urged GM to revive at least 700 of these terminated dealerships while some were restored through government mandated negotiations. GM now plans to cut their US dealers to around 4,500 towards the end of this year.
We all know that GM is changing the way that they think – they are changing the way that they do things and they are certainly changing the way that they truly act. While 2009 has been a very, very tough year for this particular auto group, they finally have some good news. The workers for GM have taken the hits the most it seems and now – finally, the Human Resources VP Mary Barra sent out an official missive telling that the 3 – 7% pay cuts that everyone was feeling have been restored.
This is huge – for everyone and as of September 1st, they finally are able to bring the funds back up and while the senior executives are not the ones that get to take advantage of this … well, the workers do. GM has actually saved $50 million dollars by giving those cuts during the last four months and right now – they are able to give it back.
To me, that is something that is really good for the blue collars, while the white collars might have to suffer a little bit – they don’t get to get their third car this year … big deal right?
February of 2009 has been a major headache for the top six car manufacturers in US. Sales sank for more than 37 percent, and it is the worst ever, since December of 1981.
To note, General Motors had the biggest decline among the giant car companies with 53.1 percent, Ford Motor with 49.5 percent decline and Chrysler who slide down 44.0 percent. Toyota sales also sank with 39.8 percent, while Honda and Nissan with 37 percent.
A sad but true fact, US monthly sales still failed to rise, since October 2007, along with the 15-month global economic recession. For three consecutive months, the year-over-year decline was 0.7 percent. As for the month of February, consumer’ confidence decreased due to the impact of the economic recession.
Despite car manufacturers’ efforts to boost their car sales by incentive spending by 15.9 percent, still, the industry suffers decline in sales. Last February, Ford was traumatized with the collapse of its bestseller vehicle, the F-series pick-up, with only 23,614 trucks purchased, a dramatic decrease of 55.1 percent from a year earlier.
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