GM, Chrysler Seek $20B in New Aid, Announce Layoffs

Update: GM will terminate various brands over time including Saab and Saturn. GM also announced it will reduce dealers to 4,000 from 6,000 over the next 5 years. There are also concerns GM may leave Canada, but Canadian PM Stephan Harper said he’s confident that will not happen as his government has had close talks with GM. GM is also seeking help from Sweden and Germany.

GM and Chrysler are now asking the U.S. Fed for an additional $21.6 billion. GM says the company needs as much as $30 billion in new aid by 2011, and needs $9.1 billion right now. Chrysler said it needs $9 billion right now as well. Both companies have announced new cost cutting measures that include new massive job cuts. GM says it will cut 20,000-30,000 jobs in the U.S. by 2011, bringing the total job cots to about 30,000 with Chrysler over the next couple of years. GM says the new aid is required due to very weak sales. GM really needs to do something about this. It needs to consider consumer trends and wants. It is clear consumers want eco-friendly and reliable vehicles, which GM has yet to produce. GM also had a weak appearance at the recent Detroit Auto show to conserve cash, however, I think GM should have taken advantage of the expo by educating consumers about their current and upcoming eco-friendly vehicles. GM really needs to push out new gas friendly car in the next few years, and may just manage to do that with its Chevy Volt. Of course, the company also needs to work on lowering total labor costs and on increasing vehicle quality and reliability.

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Hercules holds a B.Comm Finance from Ryerson University in Toronto, Canada. He is a Chartered Financial Analyst (CFA) level 3 candidate. He was previously a contributor at FiLife, a finance website owned by Dow Jones and IAC. Write to [email protected]
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