GM Posts $8.5B loss for 2005

Hemorrhaging money and sales at that rate would seem to mean that GM stands little chance of making it to the 2007 contract negotiations without declaring bankruptcy. Since GM is just about betting the farm (and Ford too) on the "success" of their new large SUV and large truck lineup that will, most likely, prove to be a vain hope since gas prices are very unlikely to go down for any significant amount of time. Up yes, down no. Sales of those vehicles won't stop but they will be down very significantly.

I would think that it is also a given that the '07 contract talks are going to be the most difficult and contentious in living memory.

GM is in a very tough spot right now. The problem with the bankruptcy route is that it could further push away customers and lead to even more sales declines, which makes the problems even worse.

Right now the marketplace continues to move towards smaller, more fuel efficient vehicles. GM unfortunately is just now rolling out it's updated truck line just when truck sales are tanking. New models typically launch with a higher initial cost structure than those of the models they replace because of start up inefficiencies.

Like many, I still think that GM needs to pare itself down to two brands and then make every product in those brands best-in-class and focus it's huge marketing expenses on the support of those brands. Chevy and Cadillac are big enough brands to cover everything GM has to offer the marketplace. Pontiac, Buick, Saturn, Saab and GMC are just costly distractions. How much does GM spend every year cooking up slight variations on it's vehicles just to be able to slap other names on them.? Chevy for the everyman and Cadillac for the high end covers the market completely. Imagine the marketing dollars which would be available to Chevy and Cadillac if all the money being pissed away on the secondary brands were available to the primary brands.

I also still think that GM should dramatically improve the terms of it's new car warranty to demonstrate the confidence it says it has in the quality and durability of GM products.

But, none of things are going to happen due to inertia and a lack of leadership.

John

"It was a year in which two significant fundamental weaknesses in our North American operations were fully exposed -- our huge legacy cost burden and our inability to adjust structural costs in line with falling revenue," Chief Executive Rick Wagoner said in a statement.

He must have forgotten to mention the third "significant fundamental weaknesses"

Shitty vehicles

Every publisher seems to have their own spin on this matter. Is the cup half full or half empty? A US$3.4 billion loss, before "Extraordinary Items" is a far cry from an $8.5B loss! News stories can be misleading. Check out this link: