Thursday, 28 May 2009

The killer blow

It was the collapse in US car sales that finally finished off GM. Since the credit crunch began, sales are down by about half. No industry could survive a collapse in demand of that magnitude. Add to that, the parlous state of the GM balance sheet, and the company was doomed.


RF said...

Dead company walking.

JonathanD said...

What happened mid 2005 to cause that spike in sales?

JonathanD said...

Ah, answer is here -,2933,164520,00.html - massive discounts. One prophetic part of the article

'In the same note, Healy commented on one of the fundamental problems facing U.S. automakers, which seem unable to sell any but a handful of models without rebates and discounts galore.'

2005 was a strange year. House prices stopped rising and car sales slowed a bit. We would probably have had a mild recession - however interest rates were lowered, companies, governments and individuals took on more debt and away we went again until 2007 when it all came back to haunt us.

OldSouth said...

GM has been bankrupt for several years, in reality, rather like a rotten tree awaiting the next windstorm to topple it.

Along comes the US Federal government, with both a Republican and Democrat at the helm along the way, placing the US taxpayer directly in the path of said tree.


The new firm, Government Motors, will not succeed, because it cannot.
It will be our British Leland, our Yugo.