Search This Blog

Wednesday, April 15, 2009

GM going bankrupt and Chrysler all but finished

Mark Zandi, Chief Economist of Moody's Economy.com says GM will file for Chapter 11 protection and that Chrysler will broken up and sold to other companies.

Basically, Ford will remain the sole American auto manufacturer...at least on the current scale. GM will come back as a 'shadow of itself'.

What is most interesting is Zandi's final point about the lesson in all of this: if you have a fundamental problem in your business, it's better to fix it sooner rather than later.

GM was running a massive debt before the recession. All that has happened is that those companies that were poorly managed and in poor financial health have now been exposed.

The question is this: will other companies in other industries learn anything from this?

1 comment:

  1. Apparently the U.S. auto industry has been barely breaking even or losing money since 2001. According to a new report by CAW, GM Canada made big profits between 1972 and 2007. Even if CAW's estimates are inflated, it sounds like the Canadian auto industry was in much better shape!

    ReplyDelete