If oil drops to $40/barrel, transportation costs go down because diesel and gas will go down and SUVs and trucks will become popular again for those who can afford/get a loan for a new vehicle. Consumers will have more money because they will be spending less on fuel and food and will be more willing to travel, or spend money on entertainment/going out to restaurants.

Quick question...how are the other divisions of GM doing? You always hear that GM/Buick is HUGE in China, and they are buying up SUVs, so aren't they making money over there? What about Holden and everywhere else besides NA. Is this figured in to our stock market or just their NA operations? Just curious because I have no idea.

 

From the standpoint of operations, GM's overseas divisions are doing much better than the North American operations - not good enough to offset the problems here in NA, but certainly not too shabby.

The overall corporation, though, is a complete mess. I'm sure that there are ways to pare the overseas operations from NA, just as Delphi did during its bankruptcy filing.

 

So, the more I think about this, the less sense that BusinessWeek's scenario makes. GMAC is in the hole about $30B, has no access to credit, and may very well be facing the bankruptcy of its ResCap division (a situation that might take down the whole company). Why in the world would Cerberus be willing to give up Chrysler (with its claimed $11B in cash - not verified by transparent accounting, of course) and an additional $3B in cash just to get 49% of what's soon to be a failed lending company? That makes absolutely no sense at all.

 

I don't see how any of this should affect your purchasing decision. Buy what you want. Financial issues aside, GM is building some darn good cars right now.

 

I think he's worried about them going bankrupt and his warranty being worthless

 

It doesn't, nor should it. I believe the part about GM looking for options to get out of the mess they're in, and why shouldn't they. However a lot of these scenarios, including bankruptcy, don't make a lot of sense if GM plans to survive another 100 years. A lot of this speculation is just panicky short term investors looking to put lipstick on a pig and make GM more attractive in the short term so they can run up the stock price quickly and sell for a nice tidy profit, or in some cases minimize their losses.

I honestly believe GM can be saved, however its going to take a long term forward thinking strategy. Short term fixes (like buying Chrysler) may not help the long term survival of GM.

 

Pretty much. We almost custom ordered a Sky to have it delivered when our lease ran out, but I dont trust any dealer right now with a $500 deposit to be held for 3 months. The local builders around here have been going out of business left and right taking peoples construction deposits along with them. I know car dealerships aren't doing much better right now.

 

I realize it's been discussed in another thread but would you balk at the $15B+ offered by the Fed if you were GM (having hypothetically now acquired Chrysler)? If GM's burn rate is said to be $1B/month, that would buy them viability through to 2010.

 

I never said it didn't sound like a good deal on paper for GM. However it makes absolutely no sense for Cerberus to make the deal.

 

Oh, I know. I was agreeing with you but I decided to pose the question in a rhetorical way.