Unless your head was buried in a pile of cocaine, or sand, whatever works for you, you know that the Big three automakers are really hurting these days and that pain really hit the market last week.
As Congress attempted to provide financial aid to the automotive industry some startling financial information became public – Ford has roughly 38 billion dollars on hand, or about three years of funding, where as GM has about 20 Billion, or one year worth, and Chrysler has 11B in the bank but no true estimate on how fast they are burning cash (since they are no longer public they do not need to disclose their financial information).
Rumors of bankruptcy, automotive collapse and a massive waive of unemployment was all over the press. It seemed that GM and Chrysler were about to fall apart overnight. While the misfortunes of Detroit have been documented for some time the rapid unwinding of the credit markets only added to woes of the carmakers. One rumor that received very little press, but actually makes business sense, was that GM was an acquisition target of Chinese carmakers SAIC and Dongfeng.
Little does most of the general U.S. public know but GM owns 35% of the Chinese automotive market share is considered to be a luxury brand! Let me put that in different terms – GM is a successful company in China. As SAIC and Dongfeng are attempting to expand market share in China and the U.S., plus achieve significant economies of scale, an acquisition of GM by a Chinese company only make good business sense.
If a Chinese rival acquired GM, do you think the companies’ workforce would be welcoming of their new overloads? Do you think the pride of individuals who get in the way, or do you think they would be happy for the survival of the “American” giant?
While I have no answer, I find such a scenario to be the ultimate irony for the financial crisis facing the United States today.
Related posts:
- Say hello to our new automotive overlord – China
- The Big Three (GM, Ford, Chrysler) go begging for a hand out yet again
- Contradictions from Chrysler
- Chrysler files bankruptcy court motion to eliminate 789 of its 3,200 US dealerships
- Chrysler tells Canada “Give us money or we take our toys and go home”