General Motors ended 2011 with $37.5 billion in liquidity. That’s an increase of $4 billion compared to 2010 and an increase of 294 percent compared to pre-bankruptcy levels, when the company had more liabilities than assets. So the question to ask is, what should The General do with all that cash (and other liquid assets)?
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Comments
GM shouldnt give a damn about their share price or pension and pour everything into product development and nothing else. If they do that and in five years are the number one automaker in sales and PROFIT, like 12 billion a year in net profit, then their share price will skyrocket no matter what, dividend or no. They will have so much money that they could easily fund the pension without breaking a sweat. I would also save a little bit for some unforseeable event (about 10 billion).
I agree 100%. But then I look at Toyota… which lead in sales and profit for half of the last decade with products that weren’t really the best in any category (low-volume, low-margin Prius aside).
So I wholeheartedly believe it’s all about product, until I look at Toyota’s lineup of mediocre cars, trucks, and SUVs.
True, but that success of the last decade despite their average cars was because of the reputation they built in the 90s with amazing cars. In short they go complacent which often happens when your competitors are building cars that fall apart as soon as there driven off the lot(aveo and sebring anyone). If Toyota and Honda continued to innovate and continued to make the best products ever throughout the last decade as they did 20 years ago, than they would still be leading to today, disaster or no.
Pay back ALL, of their bail out money.
I’d guess that about 50% of Republican voters will not buy a GM product right now. The sooner GM can get out of the position they’re in (USGOV owning GM stock) the better. My theory is that if GM can get the stock prices to within $10/share of the breakeven point, they’ll just buy out the rest of the shares. Anybody know how much that would cost BTW?
Investing in more Voltec vehicles must be the next step. The public driver needs CUV, SUv, trucks, and other utility vehicles that must have EREV drivetrains to reduce oil consumption, eliminate imports of oil and foreign vehicles, and electrify America’s transportation. By 2020 we must be the leader in electric and EREV vehicles domestically first and for the rest of thew world soon after.
I agree with product development, do what Ford is doing.
How about paying back the American Public that bailed us out, and buys the cars that make us profitable?
What about paying the United States government (taxpayer) back …
GM may have beaucoup $$ in liquidity, but it still doesn’t have any money: let’s face it, that huge pile of dough wouldn’t begin to cover even a minor payback to those of us who lost out on our investment when the shares in pre-BK GM were dissolved: why should any present stockholders get a dividend? The govt. [majority shareholder] is just going to waste any money it gets anyway, so it is in everyone’s best interest for GM to plow the money back into modernizing physical plant and new model development. The one thing that MUST NOT happen is giving all the execs huge bonuses for essentially doing nothing more than being in the room when the announcement was made: this is one of the huge problems with American business & Wall Street today, since current corporate/financial culture rewards a select few so richly for merely being in the right place at the right time.
Product product product.
GM has ~ $11.7 billion in debt, they should pay that off and stop accruing interest on it.
I agree with Babersher and others – R & D, and get new product out the door. Rather than focus on short-term.
This is a crucial time for GM. The big segments, like compact and midsize sedans is a sure-fire shootout. Malibu really disappoints when matched up to Fusion in every category statwise, so we’ll have to see if road tests and owner satisfaction bolsters Chevy’s position. Diesels look to be larger in the future. Ford got the jump in PHEVs ( Fusion Energi/ C-Max Energi ) while GM focused on Voltec – and GM says we’ll have to wait ’til 2015 to see what it has up it’s electric sleeve. EV Spark is too little too late.
Gas prices for my neighborhood in WA State peaked today at $3.95/gal reg. unl ( GasBuddy.com ). That’s an over 20 cent increase per gal in one week! GM is positioned well with Volt, but needs lower-priced options/solutions. Recently announced: U.S. gov. will increase ethanol content in gas from the current 10% to 15% by summer. Does this mean our food prices will rise? We all know the performance of conventional powerplants decreases with the increased content of ethanol. This is prime-time for diesel Cruzes and more efficient SUVs.
I’d hoped by now we’d be hearing rumors of a Voltec SUV, an “econo-Volt” with smaller battery pack and PIPrius-like AER, new high-mileage full hybrids and an EREV truck + van from GM. I was shocked when I heard the standard ICE Fusion will get higher hwy. mpg than the 2013 Malibu Eco! Toyota is hitting the nail on the head with it’s expansion of the Prius line to include mini-minivan – Prius V, the subcompact Prius C and PHEV PIPrius. Not only is the timing incredible, but the prices are spot-on. It’s the pricepoint that matters and this, like the Fusion, leaves GM flagging behind…again! With Hyundai coming on strong, the war heats up out there and GM sure has underwhelmed us as they struggle to right Volt’s PR and dish out cars that provide competitive mileage.
I’m a bit worried about GM. It looks fairly certain the G.O.P. doesn’t have a chance in the 2012 election, so the Republicans can’t help GM and Big Oil with rebate cuts and plans to drill everything that’s sacred. Any excess cash they have definately needs to go into innovative product to meet the challenge.
Toyotas have been saught after for 30 years as economical and easy to own; they built a reputation as a leader because they filled a need for the consumer; GM and others had forgotten about the consumer and quality. As GM turned the titanic around they missed the Iceberg and instead got sucked into a vortex, by the time GM had raised there quality many people had become commited to other brands and had commited themselves to the mindset that GM cars were junk, I remember trying to convince a friend years ago to buy a CTS over an Acura and he kept going back to his 81 Cutlas and what a piece of junk it was; I was like that was 25 years ago get over it, and I was like just cause you had a bad experience doesn’t mean everyones Cutlas was junk; anyway… GM lost customers not because they built junk but because they built cars that did not meet customer expectation. Now they need to invest in being the automaker that people expect greatness from, as well as cars That surprise consumers with value for the money…We know GM can build great cars, I would have never expected I would trade my Chevy Blazer in with 240,000 miles.
GM still has considerable debt (~$11.7 billion as of Sept 2011), they should use some of their cash to pay that off and stop accruing interest on it. The rest should go towards making strategic investments in future products because they need to shave off costs to make up for having to pay the premium for UAW labor. Buying back stock to increase the share price to the point where the US government will make it’s investment back would be nice, and would generate positive PR for GM (unlike their mishandled “paid in full” ads where they paid back TARP money with…other TARP money), I don’t think it’s necessarily the most productive allocation of those resources given the companies current situation (obviously depends on how much they would have to absorb, but the stock price would need to roughly double and that’s a tall order for a company with a market cap of $40 billion – it’s within reach, but taken at the expense of other opportunities to invest that money).
Develop great products, get them to market faster for less money and keep working on inching that profit margin towards 10%. If they can’t do it by cutting costs, then they’ll have to make great, quality products that deliver a high value for consumers to build up the type of good will that Toyota had until recently – then you can start to set prices higher in accordance with the power of the brand but unfortunately that’s a long way away.
Hmmm. What is the source of the $11.7 billion debt figure?
Pay back the US government (taxpayers)!
Pay back the tax payers!
tax pay back the payers!
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Shame those same people as so much of GM, but not of the banks.
To all of those mentioning paying back taxes.
Do you know what the size of our deficit is.
14 , 000 , 000 , 000 , 000 and counting
Do you know how much the combined bailout was?(Most of which has been paid back)
39 , 000 , 000 , 000
The deficit is 359 TIMES the bailout.
Our taxes are going to much worst places than a bailout that saved millions of jobs and prevented the next Great Depression.
We are losing much more of our tax money in Government inefficiancy and our political gridlock by ALL of our politicians. (every year rather than a one time bailout).
Do you guys ever contact your congressmen where your taxes are going rather than blaming GM because its more conveniant that confronting our real challenges.
Ill repeat one more time that most of the money has already been paid back and the rest will get paid back in a few years and when the Government sells its stake.
Oh and in case anyone accuses me of bias, I always vote Republican.
Smaller Government, Better Government.
The most sane, real, and true comment on GM Authority.