General Motors CEO Dan Akerson reportedly plans to reorganize the struggling automaker, hoping to make it more efficient by replacing regional "fiefdoms" with global marketing, purchasing, and product development efforts, according to a Bloomberg report. GM reclaimed the global sales crown from Toyota last year, but its stock has slid by 35 percent since a 2010 IPO following a $25 billion federal bailout and government-backed bankruptcy restructuring. The company's net income dropped by 50 percent in the first half of this year as its U.S. market share slipped and it lost money in Europe. Is GM headed into another meltdown?
GM will soon go bankrupt, again: It's a good thing President Obama is proud of his GM bailout, says Louis Woodhill at Forbes. "If he wins a second term, he is probably going to have to bail GM out again." The company still can't crank out cars Americans want, and it gets less cost-competitive as its U.S. market share drops. It's gone from 48 percent in the '60s to 20 percent in 2011 to 18 percent now. If GM's piece of the pie gets much smaller it won't "have the resources to attempt to recover."
"General Motors is headed for bankruptcy — again"
The automaker can escape this slump: GM "has hit a rough patch," says Rick Newman at U.S. News & World Report, but it's "a vastly better company than it was three years ago," when massive losses forced it into Chapter 11, and Washington helped bankroll "a fresh start." Once pent-up demand for Japanese cars, briefly made scarce by Japan's 2011 earthquake, eases, and GM ends a "lull in its product cycle" by rolling out a new generation of SUVs in 2013, GM should "regain some momentum."
"More bad news for Obama: A slump at GM"
Things might get worse before they get better: "Believe it or not, CEO Dan Akerson and his team are — for the most part — doing a solid job of getting GM's house in order," says John Rosevear of The Motley Fool. But forces beyond their control are holding them back. Europe's financial crisis is killing sales there, and investors are bidding down their stock due to fear that the federal government will sell the 500 million shares it received as payback for the bailout. Those problems should "be resolved in time — but it could take a few years."
"Uncle Sam's GM investment is still coming up short"
THE WEEK'S AUDIOPHILE PODCASTS: LISTEN SMARTER
- Why you shouldn't eat dog. Not even once.
- Why you should really take a nap this afternoon, according to science
- How U.S. special forces are preparing for the worst-case scenario in North Korea
- Grammar quiz: Do you know the passive voice?
- Why Israel can no longer let the Palestinian Authority be responsible for security in the West Bank
- How social conservatives became a minority in need of protection
- Here's the schedule very successful people follow every day
- What would a U.S.-Russia war look like?
- I hate Ayn Rand — but here's why my fellow conservatives love her
- Why charity can't solve society's deepest problems
Subscribe to the Week