Thursday, December 11, 2008

Are you planning to buy a GM car anytime soon? Didn't think so.

You get the feeling that the big loan to GM is more about preventing a panic in the markets at this critical time than actually bailing out the company? The GM we know right now is a goner.

I've covered the auto industry a little in various capacities. It takes years and years for car companies to build owner loyalty. (And car owners by nature tend to be loyal to one or two brands. This is a fact of the business that the companies constantly obsess over.) It takes years and years for car companies to lose owner loyalty, too. (In the case of GM, it took decades.) Even if they started making amazing cars (not SUVs or trucks, but cars), it would take a very long time before consumers bought into them (or bought them) on a mass scale. (Let alone the fact that people aren't buying cars right now.)

GM will either need to file for bankruptcy, or find a way to reorganize completely without the government officially calling it bankruptcy (this new bailout plan does nothing of the sort). This is inevitable. In the meantime, we'll be dishing the company more bridge loans to nowhere until the rest of the economy starts to turn around.

Do you really see any other course for this wreck? Happy 100th Birthday General Motors.