I've traded GM in the past but not yet touching this drop. I think it has a ways to go possibly so why risk it. "Unemployed, hungry? Eat your Japanese car".
Consumers Won't Buy From Bankrupt Car Maker Tuesday December 27, 11:12 am ET Nearly Three-Quarters of American's Won't Buy a Car From a Bankrupt Company, Survey Shows CHICAGO (AP) -- Nearly three-quarters of Americans wouldn't buy a car from a bankrupt company, according to a recent survey. In a nationwide survey by the Cincinnati-based research firm Directions Research Inc. published Friday, only 26 percent of respondents said they would purchase or lease a new car from a manufacturer that had declared bankruptcy. General Motors Corp. lost nearly $5 billion in its North American automotive business in the first nine months of 2005, and speculation has mounted among investors that the auto maker may eventually be forced to file for Chapter 11 protection. GM recently announced it would close 12 North American manufacturing plants as part of a plan to cut $7 billion in costs per year. Company executives have denied they consider bankruptcy an option. They have noted that buying a car is a long-term commitment, and buyers will be put off if the manufacturer is bankrupt or considering bankruptcy. The survey data indicate that consumer attitudes toward a bankrupt auto maker would differ significantly from those toward airlines that have filed for Chapter 11. Several large airline companies, such as UAL Corp. and Northwest Airlines Corp., are in bankruptcy and continue to have passenger numbers similar to carriers that aren't bankrupt. The survey polled 1063 randomly selected adults during the three weeks ending on Dec. 14. The results had a margin of error of plus or minus three percentage points. Directions Research said the survey wasn't done at the request of a client nor paid for by an interest group. Among other findings, 28 percent of those surveyed said they would consider purchasing a car from a Chinese company if it started selling in the United States. Only 15 percent of respondents said they would purchase a car from an Indian company.
Chances of reorganization are relatively high. The company cannot hold its share price which is the main indicator of public sentiment, and labor costs if not adjusted in favor of GM, will eventually drive the company into the ground. People are speculating that Bush will step in to save them as was done with Chrysler years ago. Problem is they will have to act within a specific time frame in order to get relief that way. Otherwise they will run into an unfriendly political climate in the next election. I would bet on reorganization within 2 years. During that time, I would expect price to hit low single digits, perhaps around $5-7/share. I would expect GM to follow the "Lucent" model and simply drop a little bit further down the hole each quarter. Just one man's opinion. Steve
Its about time that GM gets removed from the DOW I dont understand why are they still waiting... my guess would be GM gets kicked late 2006 or early 2007. there are enough precedents from the DOW past of removing a dying company. ...should have taken GOOG into the DOW,would have been 11500 by now haha
With all the negative news on GM the last months or so, do you feel it has or will affect the workers building their cars?....will the workers on the assembly line perform less quality work than if GM was sailing along smoothly?..Will the cars currently being assembled be of less quality than normal would you say due to all the problems GM is having?
Not really. It's quite high tech, so just because a worker is having a bad day does not mean the car will be less in quality. Maybe if the machines had a brain, we might see less quality
GM Shares May Fall 33% in 2006, Says Banc of America (Correct) January 3, 2006 09:53 EST -- Shares of General Motors Corp., the worst performing stock in the Dow Jones Industrial Average in 2005, may tumble another 33 percent this year as the automaker's cost-cutting efforts fall short of its forecast, according to Banc of America analyst Ronald Tadross.