On November 7, General Motors posted a net $2.5-billion third quarter net loss, and at the same time, said that it may run out of cash in 2009. The company promptly ended the talks of a “strategic merger,” which everyone knows means dropping the plan to buy Chrysler. Considering the economic problems we are having, it’s hardly surprising that GM would be in the red for the quarter, but the magnitude is surprising. After all, when you hear a company talking about a $10-billion buyout, you wouldn’t expect the same company to turn around in a week and say it just realized it’s $2.5-billion in the red and may soon run out of cash.
With this bad news in hand, GM is going to liquidate some assets and cut expenses, which will no doubt include a large number of layoffs. At the same time, GM will definitely be going to the government asking for a fair amount relief funding. This has people in the conspiracy theory camp wondering if there is something deeper behind the scenes. Nevertheless, this signals the beginning of a major landscape shift in the auto industry.
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