GM's Market Value Down to $7B...

[J.M. Vargas]

... after Goldman Sachs' downgrade of GM stock to 'Buy' sent the stock reeling Friday afternoon. From CNBC: http://www.neogaf.com/forum/showthread.php?t=319574

That means the world's largest auto maker has a stock market value of only about $7 billion. That compares with a market cap of about $56 billion in 2000, when the stock was at its all-time high of $94.62 a share.

To put that in even more perspective, GM's market value is now roughly equivalent to that of tax-preparation provider H&R Block

Even more humbling for the auto maker, GM's value is now:

* Half that of cosmetics company Avon

* A third of cruise operator Carnival Cruiselines

* A quarter of Internet media company Yahoo!

* A fifth of online auction house Ebay

* A sixth of retailer Home Depot

* A seventh of biotech firm Amgen's

* An eighth of drugstore chain CVS

* A ninth of fast-food giant McDonald's

Last, but not least, GM is now 1/66th the size of fellow Dow component Exxon.

Wouldn't it be ironic if one of the lasting legacies of the oil/business friendly Bush administration is the demise of one of America's biggest corporations? I seriously wouldn't be surprised if Toyota or another foreign car maker swallowed GM whole before the end of the year. Either that or the stock holders sell GM for parts and pocket the change.

[mkiker2089]

I don't see this as alarming really. It's just the nature of the game, and GM is scaling down production to meet demand. There are more manufacturers and less consumers.

Comparing GM to McDonalds is a bit odd. You don't say they are failing because they make less cars than McDonalds makes hamburgers. Fast food is a lucrative industry for anyone now. There are plenty of consumers and plenty of room for competition. If they don't eat at your store today, they will. It's different with cars, if you loose the car sale it's five years before they'll buy again, and you probably won't be on their list then either.

What's hurting the big 3 is the union pure and simple. It's great for individual employees but horrible for a business, especially one that's hurting. Employee benefits and wages climb despite the company shrinking, so if they don't bust the union they may go under. Fortunately union busting is already happening in the form of buy outs and lay offs.

[Steve T Power]

I've owned a few brand spankin new GM vehicles since 2000, (2000 Sunfire GT, 2003 Sunfire GT, 2007 Persuit G5 coupe) and each one i've gotten into always feels great - considerably more "upscale" then anything in the same price range from the competitors (my fully loaded G5 has twice the comfort vs. the latest model Civic Si, with 1/4th the road noise, and all of the features/pep, for almost 6 grand less...).

I also love what they're doing with the new Camaro/Corvette, and the Pontiac line is really giving chrysler's stuff a run in the styling/features department, at a fraction of cost.

I'm sorry to see em fall so hard.

Aside: I'm not one of these guys who hates on auto manufacturers, except for a lot of the Japanese stuff, as it's cheaply made/built/etc, and is generally overpriced (Mazda 3, Civic, Corolla, i'm looking at you.)

[BrettCullum]

I recently bought a new car, and I gave GM and the American automakers a fair shake on tryouts. But in the end I got the best deal on a Honda Fit, and it seemed to be the best value for my buck. It has great gas mileage, enough amenities to make me happy, and a killer warranty. US made cars just don't seem to be keeping up with what I want out of car. Still, that is shocking. And yes, you should be able to compare them to other American companies. But it is strange that all the fast food companies are from here. Have we ever seen a foreign competitor in fast food? Guess the Japanese, Chinese, and Europeans just can't build a better burger.

[Paul Kile]

I don't have much sympathy for GM or the other American car companies, because they have dug their own graves. Years of convincing the public that they NEED oversized, inefficient vehicles, and the public believed them. Now as gas prices climb to record levels, GM and Ford (and to a lesser extent Chrysler) are caught with lots full of unsold trucks and SUVs. Well, that's just too bad. They brought it on themselves.

I swore off GM back in the bad old days of the 1970s and have never come back. The worst thing is that their corporate beancounters pinch pennies with build quality in order to save a buck, and it shows. My folks bought a Buick LeSabre back in 1993 and sold it at 25,000 miles (after requiring a new water pump, suspension work, and various other components that would have lasted 100,000 miles if it were a Toyota). I know the quality of GM products has improved in recent years, and all the ratings establishments boast that the quality is approaching that of Japanese cars. Well, if I am going to buy the second most expensive purchase (next to my house), I want the BEST reliability, not second best.

The pundits are raving about the Chevy Malibu, and they may be right, but compared to our 1996 Camry, the Malibu is UGLY. Of course, you can't base your car choice on appearance these days, because every one of them is ugly. High beltlines, big butts, leering grilles, they all turns me off. I have no idea what I will do when it comes time to replace our commute vehicles.

[Kevin]

Paul, you sound like my dad.

[Paul Kile]

Paul, you sound like my dad.

Damn straight - I'm probably old enough to be your dad too!

Here's a perfect demonstration of how today's car designers have not learned from history - new cars can be as hideously ugly as the old ones:

1958 Edsel - a car so ugly it elicited nervous laughter when it was released:


2005 Subaru Tribeca - proves that the Edsel genes were out there lurking, waiting for a chance to reappear:


1961 DeSoto - This is the ugly that caused the demise of the DeSoto brand:


And the 2008 Honda CRV - I saw this at a car show, walked around in front of it, and couldn't stop laughing! They must have unfrozen Virgil Exner's brain and put it to work at Honda! (Virgil Exner was the designer of the finny "Forward Look" Chrysler products of the 50's-60's):

[call]

As Steve mentioned, people seem to like the redesigned Corvette, Camaro, and so on. Unfortunately, these also happen to be the biggest kind of gas guzzlers out there, demonstrating once again how out of touch Detroit is.

It's the employee benefits that are killing GM and their ilk. Something like $2500 of every unit (car) is simply cost to pay retiree benefits. And it won't be any different for years to come.

It's been 20 or 30 years since the "bad quality" era of Detroit, and the opinion of them is still so bad that I'm not sure it will ever turn around. I'm in my 30s, and I've never met anyone who bought American unless they needed a cheap car (Sunfire, etc.) or they had to "because my dad paid half and he only buys domestic".

[Paul Kile]

I wouldn't dislike GM so much if they would do a little genuine market research and nurture some of their good ideas. Instead, they churn out a hopeless melange of bloated gas-guzzlers and dupe the public into thinking that they need these things.

Over the years, GM has come up with some great ideas, but they always seem to be relegated to also-ran status. The Pontiac Fiero and the Buick Reatta come to mind. In the case of the Fiero, they had a great concept saddled with lousy execution. By the time they worked out all the bugs by the 1988 model year, some bean counter decided to kill the car. The Reatta was a pretty little coupe that could have captured the "personal luxury" market, but it was sold as a Buick, and as such couldn't appeal to the geezers that trudge into Buick dealerships. Another great concept killed before it had a chance of success. I would bet that the current Pontiac Solstice and Saturn Sky will not be long for the world also, because they don't really fit into the GM worldview.

I once read that GM is so out of touch because their top management lives in a fantasy world that does not mirror how the rest of the country drives. They occupy their Grosse Pointe mansions, don't have to drive themselves to work every day, and they take one family vacation each year up to Wisconsin or Upper Michigan. One leisurely car trip per year in their bargemobiles does not give them the real-world data of California freeway cut-and-thrust, or DC beltway crawling, or hurtling across the Nevada desert. The result? Vehicles that are not in touch with the times.

[J.M. Vargas]

GM will kill Pontiac brand (official announcement coming on Monday): http://money.cnn.com/2009/04/24/autos/pontiac_obit/index.htm.

[Steve T Power]

GM will kill Pontiac brand (official announcement coming on Monday): http://money.cnn.com/2009/04/24/autos/pontiac_obit/index.htm.

This makes me incredibly sad. So much for the 2012 Firebird/Trans Am rumors.

And the Pontiac G8 is absolutely stunning (best test drive of a totally unobtainable car i've ever had). Every bit the car that the lower end Mercedes and BMW are in the 4-door saloon department. That there was also a 2-door "Camino" style teased that i will now never be able to own makes me want to cry.

[mkiker2089]

Yeah, Steve, I know. I wish they had gone through with the plan to make it a niche car on the Chevy lots. I got an email from the Pontiac lot asking me if I wanted to drive a G8. I told them that since GM decided to drop Pontiac I've decided not to buy a GM.

[Dimwitted]

GM is reaping what it has sowed for the last 40 years. Their arrogance and inability to change has destroyed them. And no, the unions aren't to blame. It's ALL of GM. Unions, management, dealers are so out of step with reality that being taken over by the gov't was an *improvement*!
Whether it can come back even as a ghost of its former self remains to be seen.

[J.M. Vargas]

US Government (under Treasury) and UAW to own 99% of GM under new Obama bailout plan; 1% left for stock owners; GM to cut additional 21,000 workers; Pontiac no more: http://www.msnbc.msn.com/id/30431844/.

[J.M. Vargas]

GM all but certain to file for bankruptcy on June 1st: http://www.msnbc.msn.com/id/30648961/.

To remake itself outside of court, GM must persuade bondholders to swap $27 billion in debt for 10 percent of its risky stock. On top of that, the automaker must work out deals with its union, announce factory closures, cut or sell brands and force hundreds of dealers out of business — all in three weeks.

GM, which is living on $15.4 billion in federal aid, faces a June 1 government deadline to complete its restructuring plan. If it can’t finish in time, the company will follow Detroit competitor Chrysler LLC into bankruptcy protection.

Although company executives said last week they would still prefer to restructure out of court, experts say all GM is doing now is lining up majorities of stakeholders to make its court-supervised reorganization move more quickly.

The biggest obstacle to GM restructuring out of court appears to be its bondholders, who have been reluctant to sign on to the stock swap when the government and United Auto Workers union would get far more stock in exchange for debts owed by GM.