Monday, June 1, 2009

Two US automakers down

Well, it's official: GM has filed for Chapter 11 (reorganization) bankruptcy. They join Chrysler who filed back in April. Chrysler plans to sell most of it's assets to Fiat, and it's union will end up owning a majority stake in what's left. GM will be selling off at least half it's brands (including Hummer), and the majority of it's stock will end up being held by the US government (the majority, as security for loans), existing bond-holders and the union. In both cases, pre-bankruptcy shareholders will likely end up with nothing. They may still own shares, but they'll have been diluted so much by the new equity being issued that they'll be essentially worthless. GM plans on closing a large number of it's manufacturing plants and idling several more. That'll hurt employment figures. The only positive part is that, unlike Chrysler, GM will still be building cars when it's all over. They'll be half their former size, but they'll still exist. Chrysler looks to be a shell after everything goes to Fiat.

That leaves Ford as the only US automaker still in full operation. And even they're paring things down quite a bit, eliminating lines that aren't selling well and cutting dealerships with overlapping territories.

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