If GM goes bust, is it good or bad for the U.S. consumer and economy?

Question

Last quarter General Motors lost $15.5 billion, last month GM's U.S. vehicle sales (daily-selling rate) plunged 31.7%, and recently S&P lowered GM's debt rating to the 6th level of junk.

AutoOnInfo.net points out that GM's declining sales have followed a long history of a persistent or growing quality gap between it and Toyota and Honda.

So, if GM were liquidated:

If you presently own a GM vehicle, would you opt for a product of Toyota or Honda or a product of Ford or Chrysler? Do you think enough present GM owners would buy products of Ford and Chrysler to give these companies enough resources to improve the quality of their products? Do you think that whatever additional resources Ford and Chrysler might obtain from the demise of GM would be spent on improving quality? Would the demise of GM be good or bad for the U.S., the U.S. consumer, and the U.S. economy?

Answer 1

It would be horrible.  Millions of Americans would lose their jobs and if the country isn't in a recession yet it would be then.  I know people hate to believe it but GM makes several million of cars in the US every year.  They have dozens of plants and engineering centers in the US.  I work at a supplier (Honda dept) that also makes GM, Toyota, Isuzu, and Nissan parts.  If we lost our GM business the company would go out of business even though its not our largest customer.

BTW most of those loses were write downs and they still have 21 billion in cash.  They are profitable outside the US and made record sales and profits in many markets.  They bailed out Delphi (again) and American Axle, bought out thousands of useless UAW people, had to deal with a 3 month strike at American Axle which shut down 30+ GM plants, the UAW stiked at any GM plant that was making popular vehicles to force GM into bailing out American Axle.  

The US market has collapsed and everybodys sales were down huge and many lose money.  Toyota's quality has been dropping for 10+ years its not any good anymore.  Several GM brands (Buick, Caddy) are near the top of the quality rankings above Toyota.  Fords quality is also among the best and above Toyota in many cases.

Benny - GM and Ford both employ more Americans by them selves than all the Japanese manufactures combined.  They have a handful of plants compared to probably easily 30+ for each of the Big 3.

Answer 2

The big three american companies have never cared about quality.  They will just lie about it in their ads.  They just don't get it, never have and never will.  I won't miss them and the Japanese will just make their cars here so we will have to deal with the job loses not to those whom build the cars but the mechanics that will be unemployed because of a lack of work.  My next door neighbor owns a repair shop and hates the Toyota and Honda cause you can't make any money off them.  Just routine stuff like oil changes and brakes.  He puts on the cheapest pads so they wear out quickly and the customer has to return for more work.  It's the american way I guess.

Answer 3

Bad

Answer 4

In the short term it would be bad for the US economy since we would loose jobs. However, the US economy is resilient in that it opens opportunities for other companies to fill the gap left by GM.

Could be the opportunity for a car company that specializes in alternative forms of transportation to come in and take over the market.

Let hope American ingenuity is still alive and well.

Answer 5

My answer to the first question: I don't own a GM vehicle and will likely never pay money for a GM vehicle; however, if it were given to me free and I was paid $100,000 to drive it, I might.

My answer to the second question: I think it likely that enough present owners would switch over to Ford or Chrysler to give them an opportunity to improve quality, but I'm not certain. This is a very interesting question.

My answer to the third question: Most likely some of the increased revenue would be spent on attempting to improve quality, although I think it only problematic as to whether any significant improvement would occur. AutoOnInfo.net's studies on reliability and durability suggest that any improvement would likely be rather marginal. In 2008, Toyota accounted for 71% of AutoOnInfo.net's Best Automobiles of 2008 and Honda accounted for 24% of the remaining 29%, while GM accounted for 30% of the Worst Automobiles of 2008, Ford - 17% of the Worst, and Chrysler - 14% of the Worst.

My answer to the fourth question: It would likely be good for the U.S., the U.S. consumer, and the U.S. economy. Both Toyota and Honda, the Reliable Two, have extensive manufacturing facilities in the U.S., and the products that they turn out seem not to have significantly suffered from being made in the U.S., although there have been some kinks in early production arising from rapid expansion to meet soaring global demand for Toyota vehicles.

Answer 6

ok ur dumb u really think they will go bust just because they make trucks does not meen they will go bust the v6 has good gas milage and they sell 4 bangers

they would if gmc was by itself becuase all they have is trucks

Answer 7

I own a 2006 Malibu and have had continuing problems with the power steering with very little satisfaction from GM Dealers or GM Corporate. If GM treats everyone else with valid warranty issues like this then I can understand why they are where they are today. As far as I'm concerned GM can go pound salt up it's rear end. I have purchased my last GM car anyway.

I refuse to pay another $30,000.00 for a car that I am afraid to drive!

Answer 8

Would be terrible if GM shut down.   They are the largest employer in the US, or at least one of them.   Very bad.

As far as what I'd buy, I'd recommend a GM or Ford product over a Toyota or Honda with no reservations now.    

Ford and Toyota are actually tied on top of one of the REAL quality indexes.  (not JD Power or Consumer Reports)

GM is the world's largest automaker.   Toyota is pushing that, but it's close.   GM is gaining sales in lots of foreign markets.

IMO, our government has given the j*p makers an unfair advantage, by allowing them to come here and sell all they want.    

GM and Ford aren't allowed to do that in Japan.  

But quality has been a major issue.....that is fixed now.    And it took a long time for j*p cars not to be considered unreliable, recycled beer cans, and it took a long time for American cars to be considered c**p.    

It's going to take awhile for that perception to turn around, even though the quality of the Fords and GM's (not Chrysler) has gotten up to par over the last 5 years or so.  

Plus, Toyota and Honda have been having plenty of problems with their cars.....that word will get around sooner or later.