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Wednesday, October 19, 2005

Don't Believe It

According to the Detroit News, GM's leaders are not considering bankruptcy.

Wagoner said unlike the airline industry, where some bankruptcy filings haven't had a big affect on business, even speculating about bankruptcy hurts the auto business.

"When you're buying a car it's a very different thing," Wagoner said. "It's a massive financial commitment. You expect to own it for a long time, and (bankruptcy) is something that's going to have an impact in the consumer's mind."

That's soothing BS. Any large organization, like any military or government, tries to look ahead and plan for possible scenarios. Somewhere in GM's most secret filing cabinet, at the very top of the Renaissance Center, is a stack of paper marked "bankruptcy Plan".

However, it is true that a bankruptcy from a company the size of GM would be devastating, economically, to many people, and to GM as well. Billions of dollars of investment would be wiped out, and numerous suppliers as well. The amount of goodwill that GM would lose would be enormous.

1 comment:

Dave said...

I have to believe it's being considered, but probably isn't in their near-term plans. Selling off controlling interest in GMAC, the only part of the company MAKING money isn't a move you make when you have better options. If this doesn't work, watch for it in about 12-18 months or so, IMO.