General Motor Bankruptcy Essay

1859 Words Sep 11th, 2014 8 Pages
General Motor bankruptcy
Introduction
General Motors Company, one of the world’s largest automakers, estimated in 1908. With its global headquarters in Detroit, Michigan, USA.GM employs 209,000 people in every major region of the world and does business in more than 120 countries. GM and its strategic partners produce cars and trucks in 31 countries, and sell and service these vehicles through the following brands: Buick, Cadillac, Chevrolet, GMC, Daewoo, Holden, Isuzu, Jiefang, Opel, Vauxhall and Wuling. (Elizabeth, GM, 2009). GM was the largest automaker for 77 consecutive years from 1931 through 2007. It is longer than any other company in the world. In 2008, it was surpassed by Toyota (Elizabeth, GM, 2009).
2009 was a very
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Those vehicles commanded high sticker prices and by the late nineties made up 50 percent of the U.S. car market. After entered 21st century, the oil price raised extremely. Also there is a dramatic rise in energy prices. The demand for the big vehicles dropped quickly and customers went for smaller, less expensive, less profitable cars. GM had two major issues to deal with: A loss of revenue and a backlog of unwanted trucks.
Legacy Costs
Laws of physics take over and, like steelmakers and airlines, GM is at the mercy of global forces. Every car GM makes carries "legacy costs"--the costs of providing healthcare and pensions to scores of retired workers. For every GM worker, there are about 10 dependants, which are defined as retired workers and their families. GM has 2000 dollars more legacy cost each car than other countries’ automakers. That two grand must be built into the sticker price of any new GM car and truck. And that's money on top of developing, producing and marketing a car--costs that Honda, Toyota and others don't have. It simply cannot compete in a global economy with the enormous burden it now carries in legacy costs. It certainly cannot meet those costs for long off a shrinking sales base and negative cash flow. When the international car companies came to the U.S, It makes competing difficult for GM. 2000 dollars benefit on price changed a lot customers’ mind from U.S vehicles to other countries like Honda, Toyota and Hyundai, which

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