GM is down, but is it out?

GM once an iconic symbol of American industry has now fallen far from its highs of the 1950s and 1960s. In 2008 GM was the world’s second largest automaker in sales. On June1, 2009, General Motors filed for a government-assisted Chapter 11 bankruptcy protection. It is the third largest bankruptcy filing of the world. It can be expected that there will be significant changes with GM as it undergoes this restructuring. Hopefully it will emerge a more efficient and effective company that will rival foreign auto makers that have become so successful.
Taxpayers in the U.S. will end up with a 60% ownership in GM, with the union, creditors and the Canadian government owning the remainder of the company. GM will be getting rid of Pontiac, Saturn, Hummer and Saab, this will hopefully serve to remove unsuccessful brands and help to alleviate GM’s infamous brand overlap. GM will also close more than 2,000 of its 6,000 U.S. dealerships by 2010. That could result in more than 100,000 additional job losses.
GM as of June 8 has been removed from the Dow Jones industrial average, a distinction it has held since 1925, this is a symbol of how the iconic auto makers has fallen. The company will be replaced by technology giant Cisco Systems (CSCO). The new GM will have $17 billion in debt, rather than the $54.4 billion it had outstanding as of March 31. The unions' new contracts with the company and underfunded pension funds will not be cancelled or removed. The most important thing is not that GM lays off some workers and makes one time sales of brands but rather it must strive to become more competitive and rethink its business model. If GM does not offer more competitive vehicles then it will have similar problems in the future. GM will have to create a niche for itself and specialize in it, something that other competitors will not be able to do as well.
Recently GM’s brands, Opel and Vauxhall have been fought over by Magna, Belgium-based financial investor RHJ along with other bidders. German Chancellor Angela Merkel expressed her regret at General Motors' failure to choose a buyer for its German unit Opel, and said that a decision was "urgently" needed for the carmaker's future(Reuteurs). The German government wants to be assured that Opel will not shed a substantial amount of its 25,000 workers. Berlin has made clear they want Magna to be the buyer and are set to provide 4.5 billion Euros ($6.4 billion) in state aid to make it happen. Magna remains the favored candidate as of now.
Depending on how this deal will go through it can have a substantial impact on the auto industry. Certain companies may become more powerful as others become weaker. A new global giant may emerge, or historical iconic names may disappear but it is without a doubt that this financial crisis has reshuffled the auto industry and hopefully the public will benefit from more efficient and competitive companies. GM needs to standout from the crowd with projects such as the volt which will also symbolize to consumers that GM is leading the way for vehicles of the future.

http://money.cnn.com/2009/06/01/news/companies/gm_bankruptcy/index.htm
http://www.reuters.com/article/newsOne/idUSTRE57L0KF20090823