For a while, it seemed very likely that General Motors – one of the world’s most powerful and influential automakers – would disappear completely.
During the global economic downturn of 2008, things weren’t looking good for the American company. In fact, the company’s losses were staggering. By the end of 2008, GM was just under $31 billion in the red. How could the company possibly survive?
Of course, the company was bailed out by the US government, ensuring its short-term survival. But its long-term survival was by no means assured. GM would have to prove that it could stand on its own feet again, and it would have to do so sooner, rather than later.
The government bought shares in General Motors to the tune of $45,5 billion – so effectively, tax payers had handed over an almost unimaginable amount of money to the big wigs of GM, with very little proof that all that money could be handed back down the line.
Amazingly, though, General Motors have managed to turn things around quite well. The company seems to be going from strength to strength, and at the start of 2014, it is one of the most prominent automotive newsmakers around.
An awful lot seems to be happening at GM at the moment, and a lot of these changes seem to originate from the fact that the company is finally in charge of its own purse strings again. That massive debt has finally (sort of) been repaid.
The US Government recently sold off the last of its shares in GM. Of the original $49,5 billion investment, about $39 billion has been recovered, meaning taxpayers essentially donated $10 billion to GM. That might not be an ideal outcome, but it could have been a lot worse. The government has at least recouped a significant amount of the money invested, and freed itself of an uncomfortable intervention in the public sector. GM, meanwhile, is now in charge of its own destiny again.
And the company seems ready to shake things up. Almost as soon as it was declared that the US government had sold the last of its shares, GM started making some very significant announcements.
For instance, the company has announced that it will stop selling Chevs in Europe, choosing instead to focus on Opel/Vauxhall-branded cars. This was obviously a controversial decision, but it makes sense. Chev is essentially competing against Opel/Vauxhall in Europe, and getting trounced badly in the process. By October 2013, GM had sold 121 621 Chevrolets in Europe. How many Opels/Vauxhalls had it sold during the same period? Around 702 500.
Even more controversially, GM announced that it would stop making Holdens in Australia by 2017. Now, this isn’t as shocking as it seems at first. Apart from the Commodore, all other Holdens are just re-badged Chevrolets, so it won’t make much of a difference to the Holden model range, but about 2900 Australian jobs will still be lost.
Looking east, GM has announced that it will move its international sales headquarters from Shanghai to Singapore. This isn’t because it will lessen its focus on China, however. Quite the opposite, in fact. The US might have saved GM, but it is China that will allow it to truly prosper.
China isn’t only GM’s biggest market at the moment, GM is also the biggest seller of vehicles in China. So, the global sales headquarters is really only moving in order to allow GM staff in China to focus on domestic sales – the company’s biggest money spinner.
In the US, General Motors have also taken some very progressive steps. Mary Barra was recently named as the new CEO of GM, instantly making her one of the most powerful women in the auto industry. Also, General Motors recently announced that it would start treating same-sex couples as married, even when they lived in a state that didn’t allow same-sex marriages. This decision means that same-sex partners of employees can enjoy the same benefits as traditional spouses.
A lot seems to be happening at GM. Perhaps its brush with financial death was a good thing, since it seems to be tackling the business of making cars with renewed vigour. Some of its decisions might be controversial, but once you have stared bankruptcy in the face, “business as usual” simply isn’t an option.