12 October 2008

General Motors, The Car Company

Buick started making cars in 1904 and became the General Motors company in 1908 in Flint, Michigan. GM quickly acquired new brands such as Oldsmobile and Cadillac but it’s growth led to financial problems and ownership changes. Eventually Alfred Sloan became president in 1923 and he led GM to its global dominance. He is credited with creating annual model changes and by establishing a non-competing pricing structure, used the various brands to keep buyers within the GM fold.

Today, the company employs nearly 300,000 people globally It’s worldwide production in 2007 was 9.4 million vehicles in total, and about 9.2 million cars and light commercial vehicles. These were sold under the following brands: Buick, Cadillac, Chevrolet, Daewoo, GMC, Holden, Hummer, Opel, Pontiac, Saab, Saturn and Vauxhall.

GM’s sales in 2007 in it’s largest national markets were: US 3.8 million, followed by Brazil 500,000, China 450,000 upwards, depending what you count as a GM vehicle (?), Canada 400,000, the UK 330,000, Germany 285,000 and Mexico 230,000.

Regarding production of passenger and LCVs, USA leads with 2.8 million (32% of total production), China 1 million (11%), Korea 950,000 (10%), Brazil and Germany 6% each with just over 550,000 each, Spain and Mexico just over 450,000 each (5%), Poland 350,000 (3.7%), flowed up with Belgium and the UK with about 200,000 each (2%). Seven other countries make up about 670,000 units (7.5%).


You would think that such a large, successful company as GM would be sitting pretty, but it is not. The whole company is only valued at about US$3 billion on the stock market. So while sales are holding up, losses keep mounting. Years of paying workers too high wages, and benefits when they retire, has crippled the company. The gravy train that looked like it would just keep on running is almost out of steam. It created a fool’s paradise for GM workers but reality is about to check in. Unless GM can get costs under control, surely it cannot continue. A possible merger with ailing Chrysler is under consideration but I’m not sure that two problematic companies coming together is the answer. Now with the global meltdown, it must be a worry to GM staff and retirees who get so much from General Motors.

2 comments:

  1. The hits keep on coming. Today GM posted 3rd quarter earnings, and essentially indicated that they have about six months left at the current rate of cash "burn." The only bright side -- the industry was mentioned prominently in Obama's first press conference. On the other hand, having the federal government as a shareholder might be a very mixed blessing . . .

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  2. Thanks for the comment D. I wonder if the government gets involved whether the auto industry will become a 'black hole' for funds.

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