The Reorganized General Motors

SEARCH BLOG: AUTOMOBILES

The presumption is that General Motors will eventually... soon... go into bankruptcy proceedings, but not necessarily liquidation.

What will GM look like? First, here is what GM's automotive brands look like via the GM website.

This does not show the European Opel brand.

There are also a variety of automotive related brands such as GMAC that fall under the corporate umbrella.

While GM has a vast worldwide organization, the US is, by far, its largest... and it's automotive operations are the bulk of that.

GM has somewhere around 6,000+ dealers. It is organized around four primary brand groups:

• Chevrolet
• Buick - Pontiac - GMC
• Cadillac
• Saturn

Under bankruptcy, this is a highly probably brand structure:


While Buick, Pontiac, GMC, and Hummer would be disbanded, SAAB might be an opportunity for sale. Arguably, General Motors would try to save the Buick brand. It has a stellar reputation for quality and reliability even if generally boring.

“Buick has ranked among the top 10 nameplates each year since the study was last redesigned in 2003, while Jaguar has moved rapidly up the rankings,” said David Sargent, vice president of automotive research at J.D. Power and Associates.

Regardless, the accounting numbers may make that difficult. GM achieves a lot of per-unit component savings by having its various brands share underpinnings. Eliminating Buick, Pontiac, and Saturn will increase the per-unit component cost for Chevrolet and Cadillac. Regardless, the government may push for a "minimalist" organization:

• Chevrolet
• Cadillac

The best GM could hope for would appear to be:

• Chevrolet
• Buick - Cadillac

This would mirror the Ford Motor Company organization:

• Ford
• Lincoln - Mercury

The bankruptcy proceeding would push the cost of reorganization to dealers and suppliers. Buick - Pontiac - GMC dealers would lose their franchises and may not receive compensation.

If Buick can be salvaged, the strongest of the Buick - Pontiac - GMC dealers could be converted to Buick - Cadillac... as long as they did not infringe on existing Cadillac dealerships. Otherwise, Buick would be absorbed into existing Cadillac dealerships. Conceivably, several thousand communities will be affected.

Suppliers will see significant volume drops in component sales to GM. They may, however, have difficulty extracting higher per-unit prices.

Internally, GM will slash administrative positions... up to 50% of its present salaried organization... within a short time. Design and engineering will be affected, but because of so much component commonality among its existing brands, reducing the number of brands will have less opportunity for staffing reductions... primarily in sheet metal and interior design and selected engineering.

GM will be saddled with an significant amount of hard assets... manufacturing and assembly plants... that are idle and draining cash. Some may be candidates for sale, but in the present economy and industry production overcapacity, these may end up white elephants. GM will still incur state tax liabilities from these assets.

The union will be gutted. Bankruptcy will allow GM to break its contracts and permanent firings will replace buyouts.

Retirees? Hard to say. Pensions are partially funded, but the government may have to take over funding and administration.

What will be the case is certain:

• Significant diminishing of GM corporate
• Massive investment losses by dealers and suppliers
• Essential destruction of the United Auto Workers
• Retirees dependent on the government for replacement of pensions

What also will be certain is that all of those affected will not forget who didn't prevent this.

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