General motors


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General motors

  1. 1. General Motors<br />Monica Taylor<br />Critical Issues in Business<br />9/25/10<br />
  2. 2. General Motors Quick Facts<br />Found by William Durant in 1908<br />World’s second largest automobile manufacturer behind Toyota<br />Headquarters located in Detroit, Michigan, the hub of the US auto<br />Selling its vehicles in 31 countries, GM’s largest market is China and the US, the second largest.<br /> GM Brands:<br />Buick, GMC, Cadillac, Vauxhall, Opel, Daewoo, Holden, FAW, Wuling, and Jiefeng <br />
  3. 3. General Motors Quick Facts cont’d<br />A full service automobile manufacturer offering:<br />General Motors Acceptance Corporation: finance and insurance<br />OnStar: safety, security, and information <br />Service and Parts division: GM Performance Parts, GM Goodwrench, ACDelco, and GM Powertrain<br />
  4. 4. General Motors Q2 and Q1 2010: Revenues<br />
  5. 5. General Motors Q2 and Q1 2010: Net Income<br />
  6. 6. General Motors Q2 and Q1 2010 : Earnings Per Share<br />
  7. 7. General Motors Q2 and Q1 2010: Free Cash Flows<br />
  8. 8. GM Comments Regarding Quarterly Results<br />In their press statement for Q2 of 2010, GM’s Chris Liddell (vice chairman and chief financial officer) states: “I am pleased with our progress on achieving our business objectives,…We have delivered strong product, maintained cost discipline, progressed strategic initiatives such as restructuring… and delivered two consecutive quarters of profitability and positive cash flow” (2010,<br />
  9. 9. GM August 2010<br />11% drop in sales for its core brands Buick, GMC, Chevrolet, and Cadillac compared to last year<br />7% decrease in sales compared to last July 2010<br />61% YTD sales hike for Buick <br />50% YTD sales hike for Cadillac<br />37% sales hike for Buick and Cadillac combined over last year<br />
  10. 10. GM’s August 2010 Sales comments<br />As per Don Johnson, vice president of US Sales Operations explains the results thusly: “Last year’s Cash for Clunkers program spiked industry sales in 2009, so results this August were not surprisingly a bit mixed… Importantly, three of our four divisions showed solid gains. This is further evidence that our performance is the result of balanced contributions across our brands” (2010, <br />Johnson remains optimistic for the remainder of the year due to the release of new products such as the new model launches for the Chevrolet brand: the Cruze and the Volt. Additionally, the continued expansion of the Buick Regal and Cadillac CTS Coupe will continue GM’s momentum (2010, GM).<br />
  11. 11. BanruptcyBailout Highlights<br />GM reports at the time of filing, total assets of $82.3 billion and liabilities of $172.8 billion;<br />Government bailout that made the American taxpayer a 60% stakeholder, Canada a 12% stakeholder and the UAW a 17.5% stakeholder of the new and reorganized GM;<br />The divestiture of Pontiac, Saturn, Saab, Hummer brands leaving US core brands: Buick, Chevrolet, GMC and Cadillac;<br />Idled and closure of several plant facilities throughout the US;<br />
  12. 12. BankruptcyBailout Highlights cont’d<br />More than 2000 reduction of its 6000 dealerships;<br />The initial shedding of 20,000 jobs that might top 100,000 after the completion of the aforementioned reduction in facilities and dealerships;<br />Cutbacks in health insurance for 650,000 retirees and their families;<br />GM bondholders’ investments converted to stock in the new and reorganized GM which is worth a fraction of their original investment;<br />
  13. 13. BankruptcyBailout Highlights cont’d<br />GM stock holders complete loss of investment;<br />GM’s removal from the NY Stock Exchange and the Dow Jones Industrial Average. (2010, Isdore)<br />
  14. 14. GM Here and Now <br />GM proudly reported that it will have completely paid back the initial government loans (independent of the bailouts) it received from US and Canadian governments in June 2010. <br />
  15. 15. GM: Future<br />GM has announced plans of a mid-November initial public offering (IPO) of government bailed out stock. It is expected that the American and Canadian governments will promptly make portions of their shares to facilitate a repayment of bailout funds. Q1 and Q2 results saw the return of profitability in GM which will definitely play a part in making an attractive IPO and generating demand for GM stock. <br />
  16. 16. Conclusions<br /> GM bankruptcy/bailout lessons:<br />“Problems denied and solutions delayed will result in a painful and costly day of reckoning<br />In corporate governance, the right people count more than the right structure<br />Appearance can be deceiving” (2010, Ingrassia).<br />
  17. 17. The Era of the New GM Begins<br />
  18. 18. References<br />“General Motors Corporation”, (n.d.). Retrieved from<br />Gomstyn, Alice and Jaffe, Matthew. “GM Under Fire for ‘Misleading’ Bailout Ad”, April 3, 2010. ABC News. Retrieved from<br />“Humbled GM files for Bankruptcy”, June 1, 2009. MSNBC. Retrieved from<br />Ingrassia, Paul. “Get Ready For the GM IPO”, September 13, 2010. The Wall Street Journal. Retrieved from<br />“Investor Relations”, (n.d.). General Motors. Retrieved from<br />Isiodore, Chris. “GM Bankruptcy: End of an Era”, June 2, 2009. Retrieved from<br />
  19. 19. References cont’d<br />Kim, Soyoung and Lawder, David. “GM Repays U.S. Loan, Government Loss on Bailout Falls”, April 21, 2010. Retrieved from<br />Meyer, Warren. “The High Price of the GM Bailout”, August 9, 2010. Forbes. Retrieved from<br />“The Lessons of the GM Bankruptcy”, June 1, 2010. The Wall Street Journal. Retrieved from<br />