GM risks bankruptcy as it runs out of cash, losing $73 billion since 2004, suspends Chrysler merger

This article belongs to the GM, Ford and Chrysler bankruptcy watch story arc.

bloomberg.com :

General Motors, seeking US aid to avoid collapse, said it may not have enough cash to keep operating this year [2008] unless the auto market improves or it adds capital. Available cash fell to $16.2 billion on 30 Sep 2008, GM said yesterday [7 Nov 2008] as it reported a $4.2 billion Q3 2008 operating loss. GM has already lost almost $73 billion since the end of 2004. Merger talks with Chrysler were suspended.

GM's outlook and Ford's $7.7 billion cash burn added urgency to automakers' pleas for government help after a quarter in which US industrywide sales plunged 18%. The companies are asking for a $50 billion bailout. A bankruptcy filing "would be a disaster far beyond General Motors and a sad chapter in American history," CEO Wagoner said. Should GM take such a step, the result would be 2.5 million jobs lost in the first year among automakers, suppliers and related businesses, according to a report by the Center for Automotive Research.

- GM running out of cash certainly makes for big news. It was also announced that trading was halted in GM shares. This is serious. 263,000 jobs are directly at stake in GM, and millions of people will be affected all the way up and down the supply chain. But let's face it : this isn't much of a surprise. The peakoilers have years ago predicted the demise of America's Big 3 car-makers, GM, Ford and Chrysler. We have long ago said that the likes of Toyota and Honda would overtake them, and it has happened.

We also looked on in amazement as the Big 3 refused to change course and continued to build more and more gas-guzzling SUV's and trucks as crude oil prices moved up from $10, $20 levels. We looked across the ocean and saw Toyota take the lead with its Toyota Prius, and Honda follow behind it with its Honda Civic Hybrid.

From there, it was an easy call to make, looking at the first stages of the housing bubble collapse as it happened, looking at the derivatives market, looking at peak oil. If you apply just a little bit of systems thinking, it's a really, really easy call to make.

So, will the Chevrolet Volt save them? We peakoilers don't think so. Too little, too late. Their troubles are much, much deeper than that, and there's no such thing as instant fleet replacement. It's lousy timing. In this environment of global economic collapse, Americans and others won't be in much of a mood to buy a fancy, expensive, high-tech, serial hybrid car that costs nearly twice that of a Prius or a Civic Hybrid. The peakoiler community has already started a GM, Ford, and Chrysler Death Watch thread - check it out.

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