GM Headed for Bankruptcy Again: Forbes Op-Ed

Jason Siu
by Jason Siu

Recently we reported that the auto bailout cost had increased to $25 billion, mostly due to General Motors‘ plummeting stock price. Things could, however, get worse for GM before they get any better – if they get any better.

That at least is the opinion of Louis Woodhill, a contributor to Forbes magazine, who has penned a controversial proclamation that America’s largest automaker is headed for bankruptcy once again. Here’s Woodhill’s reasoning:

In the past couple of years since GM went public 0n November 17th, 2010, the American automaker has failed to recapture a significant amount of market share, and some of it newest models have been a little underwhelming to say the least – the Chevy Malibu in particular. Thanks to the bailout, the federal government owns half a billion shares of GM, or about 26-percent of the automaker. While GM’s stock went public at $33 a share, it’s currently hovering around $20 a share, meaning it has dropped in value by a significant 39%.

As a result, in order to break even on the bailout, shares would have to reach $53 each for the government to sell.

Making matters worse is the fact that GM’s stock has underperformed relative to the market. During the period since GM went public in November of 2010, the DOW Industrial Average has risen 20 percent, meaning the current shares have actually lost 49% of their value relative to the DOW.

Woodhill puts the blame on poor products and poor leadership. Initially seen as a flop, the Chevrolet Volt has seen rising sales this year, though it’s hardly enough to keep GM appealing to the masses. The bigger issue is the new Chevy Malibu, the Malibu Eco in particular, which is regarded as uncompetitive with industry leaders.

And then there’s the spate of changes in senior management, most notably the recent departure of Global Marketing Head, Joel Ewanick. According to Woodhill and his crystal ball, CEO Dan Akerson just rearranging the chairs on the deck of the Titanic.

[Source: Forbes]

Jason Siu
Jason Siu

Jason Siu began his career in automotive journalism in 2003 with Modified Magazine, a property previously held by VerticalScope. As the West Coast Editor, he played a pivotal role while also extending his expertise to Modified Luxury & Exotics and Modified Mustangs. Beyond his editorial work, Jason authored two notable Cartech books. His tenure at saw him immersed in the daily news cycle, yet his passion for hands-on evaluation led him to focus on testing and product reviews, offering well-rounded recommendations to AutoGuide readers. Currently, as the Content Director for VerticalScope, Jason spearheads the content strategy for an array of online publications, a role that has him at the helm of ensuring quality and consistency across the board.

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  • Nonymous Nonymous on Sep 10, 2012

    Gm is NOT a car company any more. It is a social services company thanks to the unions and the government. GM's costs from medical and retirement are higher than any other car company and having the government in control of it is even worse as costs will escalate as they always do when government gets involved. GM has moved most of its R&D to China and that is where it sells most of its cars. The US taxpayers will get stuck again as GM moves out of the US market and permanently locates to China. The Volt is a DUD and most of the GM's lineup is not conducive to making profit as labor costs are higher for their cars than any other car company. If you believe what the givernment is saying about record profits, then I have a bridge that I want to sell you. The givernment always lies. Always.

  • Lexlus42 Lexlus42 on Nov 25, 2012

    Fuck GM and fuck Chrysler. I buying a Ford. That seams like America's last chance for a Obamamotors free car. I don't care if MFT ever gets fixed. FUCK Microsoft. I don't need that crap I'm my car NEway A new ford without MFT will last forever. AMERICA IS HEADED TWARDS HELL AND THE PRESIDENT IS DRIVING US THERE.