Will GM go bankrupt again?

The Week

The iconic automaker has hit a post-bankruptcy, post-bailout slump. Can it recover on its own this time?

General Motors CEO Dan Akerson reportedly plans to reorganize the struggling automaker, hoping to make it more efficient by replacing regional "fiefdoms" with global marketing, purchasing, and product development efforts, according to a Bloomberg report. GM reclaimed the global sales crown from Toyota last year, but its stock has slid by 35 percent since a 2010 IPO following a $25 billion federal bailout and government-backed bankruptcy restructuring. The company's net income dropped by 50 percent in the first half of this year as its U.S. market share slipped and it lost money in Europe. Is GM headed into another meltdown?

GM will soon go bankrupt, again: It's a good thing President Obama is proud of his GM bailout, says Louis Woodhill at Forbes. "If he wins a second term, he is probably going to have to bail GM out again." The company still can't crank out cars Americans want, and it gets less cost-competitive as its U.S. market share drops. It's gone from 48 percent in the '60s to 20 percent in 2011 to 18 percent now. If GM's piece of the pie gets much smaller it won't "have the resources to attempt to recover."
"General Motors is headed for bankruptcy — again"

SEE MORE: GM's 'love it or return it' offer: Desperate move?

The automaker can escape this slump:  GM "has hit a rough patch," says Rick Newman at U.S. News & World Report, but it's "a vastly better company than it was three years ago," when massive losses forced it into Chapter 11, and Washington helped bankroll "a fresh start." Once pent-up demand for Japanese cars, briefly made scarce by Japan's 2011 earthquake, eases, and GM ends a "lull in its product cycle" by rolling out a new generation of SUVs in 2013, GM should "regain some momentum."
"More bad news for Obama: A slump at GM"

Things might get worse before they get better: "Believe it or not, CEO Dan Akerson and his team are — for the most part — doing a solid job of getting GM's house in order," says John Rosevear of The Motley Fool. But forces beyond their control are holding them back. Europe's financial crisis is killing sales there, and investors are bidding down their stock due to fear that the federal government will sell the 500 million shares it received as payback for the bailout. Those problems should "be resolved in time — but it could take a few years."
"Uncle Sam's GM investment is still coming up short"

View this article on TheWeek.com Get 4 Free Issues of The Week

Other stories from this topic:

Like on Facebook - Follow on Twitter - Sign-up for Daily Newsletter
View Comments (97)