A GM Bailout? Why bother.

They say all good things come to an end. Surprisingly, the end for General Motors came in the mid-70s. Hopelessly mired in the "GM Way", the corporation began to suffer the effects of an insular management team, substandard quality control, uninspired styling and a total indifference to the rising tide of imported Asian cars and contentious, overcompensated UAW workers.

That GM managed to survive until now had everything to do with their sheer size and cheap gas, and the delusional belief that they would always be king of the American highway.

The unthinkable, however, is happening. On June 1st of this year, GM will file bankruptcy. Despite a recent renaissance of styling and build quality, the sudden, and now horrendous, decline of auto sales proved to be the straw that broke the camel's back.

Using Chrysler's strategy, GM will mimic a similar course of bankruptcy. They, with presidential authority, will trample over dealers and secured bond holders, and any other obstacle that threatens to derail this governmental fantasy of "easy in - easy out" receivership.

That's what we can expect for the immediate future. But what's beyond? I believe I know.

CHAOS AT THE CORPORATE LEVEL
Unlike Chrysler, GM has interconnected manufacturing interests worldwide that will complicate the reorganization of it's North American operations. It wants to shed Opel and Saab as well as Hummer and Saturn. But until it does, these orphan brands will only distract from the immediate task at hand, which is reviving the four viable marques that GM believes is its future: Chevrolet, Buick, Cadillac and GMC trucks. Other interferences will abound. With no manufacturing for months while in receivership and a tainted retail reputation, GM's share of the domestic market will fall from 20% to 10%. Morale will collapse and many of the brightest engineers, designers and managers will simply leave. The contraction on every level will most likely be mismanaged, with false stops and starts that will delay the 2010 model introductions. "Oh, and by the way, have you met your new owners?" With the Obama administration's micro-managed meddling and the UAW's bloodsucking mindset, GM will never realize any sustainable recovery. Still think the economical Chevrolet Aveo import from Korea stands a chance with UAW board members?

COLLAPSE OF THE SUPPORT SYSTEM
No surprise here. With both Chrysler and GM taking a summer vacation, what are the vendors supposed to do? This event alone will trigger a chain reaction of failures among auto parts suppliers - critical to the immediate return of manufacturing for GM's resurgence. With the chopping block massacre of their dealer network, down by half to 3,000, the misery will spread to cities and towns across America. Industry downsizing will add 250,000 to the unemployment roles in short order. And what about GMAC Financing? GMAC is already insolvent, having borrowed $5 billion from TARP funds. Won't Barack get tired feeding this beast play money every quarter?

ECONOMIC EFFECTS ON THE COUNTRY
Think you've seen all the bad news there is to see in our current economic meltdown? Just wait until the newly emerged GM, and ugly sister Chrysler, continue to lose money. I'm certain the placid taxpayer won't mind fronting a few extra billion to get them over another rough patch. With the current economic climate still in the basement, and possibly for years to come, consumer's won't be buying new cars in numbers large enough to guarantee a profitable GM. The nasty PR that GM will undergo will also alienate million of buyers, forever. Which all leads to a further erosion of market share.

THE END OF THE ROAD
I am not a GM basher. I have owned dozens, most recently a 2007 Pontiac Solstice and 2007 Cadillac CTS... both outstanding automobiles that were leading the rebirth of a new General Motors. But GM remained a bloated behemoth and the collapse of the housing market and the associated credit crisis in late 2007 signaled insurmountable problems for the world's largest automobile manufacturer. Latest figures from CSM Worldwide project total unit sales of all makes in the USA at just 8.1 million units in 2009. That's half the number bought in 2007! How can GM, even after bankruptcy, make a profit in 2009? The answer is they can't, and sadly won't for years. How long will the current administration continue to fund GM? The answer, again, is they can't for much longer. Other entitlement programs and obligations by the government will compete for the billion dollar prizes our treasury so casually doles out every month. Where does that leave GM?

The advanced 2010 Chevrolet Volt, a technological tour de force, will most likely debut as planned. But this halo car costs more to produce than it's selling price. How long can GM afford that with the end of funding from Uncle Sam? The new Chevy Cruze (pictured above) and Buick LaCrosse are winners, but will anyone notice? I believe you will see GM continue with a dwindling market share. Once it reaches 4% in North America, they will fold.

There will also be another high-profile vacancy on the American scene. Inextricably associated with the failed GM bailout by taxpayers, Obama will be a one-term president.