Quote:
Originally Posted by Hylton
Let me answer you with a question - Who needs more money, the guy who is in debt up to his eyeballs or the guy who just declared bankruptcy?
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That would be the guy that's up to his eyeballs in debt. Simply due to the fact that he still has an obligation to pay all of the debt back. Get out of bankruptcy alive and, depending on the terms, most of that obligation just disappears, hence the need for less cash.
Honestly, I seem GM coming out of this on the other side of bankruptcy without the financial weight of retirees' pensions and healthcare, plus drastically restructured UAW/CAW contracts. The only nagging debt will be that which it owes the government. US taxpayers will shoulder the bulk of taking care of the retirees pensions and healthcare. In a post-bankruptcy world, GM will be able to better compete in the market, rather than watching marketshare slip away year after year because they can't get their prices lower due to the fixed financial costs that have been burdening them.
Take the bread and butter category of mid-sized sedans, GM is getting hammered on price alone when compared to the base models of Toyota, Honda, and even Ford:
Base Retail Price (MSRP)
Malibu LS $21,605
Accord LX Sedan $20,905
Camry 5-Spd MT $19,145
Fusion I4 S $19,035
What is driving GM's higher prices? Their financial legacy obligations. If GM can get out of bankrupcty without those additional fixed costs, they could litterally drop the prices by $1500-$2000 across the board. Lower MSRP would put them on a better playing field with the competition and probably cut back on the number and size of incentives needed to move the cars. This is what I'm hoping will happen with the Camaro. Maybe not such a big drop in MSRP but a little bit.
I can hope, can't I?
