Learning from Bus Buddhists
In psychological terms, context is almost everything. Much as we like to think that we know how we will act and react in a given situation, without the richness of...
There has been a lot of speculation (again) recently about General Motors (GM) filing for chapter 11. Reports suggest that the company would use this form of bankruptcy protection so that it could liquidate undesirable assets and renegotiate contracts.
Of course, these are all things it has been trying to do over the past few months, a period during which it has received substantial funding from the US government ($17.4 billion was divided between them and Chrysler). It’s worth noting that, according to some reports, only around 10% of companies manage to reorganise successfully.
Naturally, my interest is the potential reaction of consumers if GM did file for Chapter 11 rather than the politics of bailing out companies. That said, I will add that giving a huge amount of money to a group of people who have demonstrated that they can’t run a business well seems a little, how shall I put it, optimistic.
I suspect that the consumer reaction to a GM in Chapter 11 will depend primarily on the dealership network to maintain consumer confidence. If they can reassure customers that they will be able to provide the long term after-sales support that they will need then it need not be a complete disaster.
However, the perceived risk of buying a GM car will increase for consumers. The media stories surrounding a Chapter 11 filing are likely to focus on the negative elements of the company’s past; cars that were recalled, cars that didn’t sell well, pr0ducts that were out of touch with changing market tastes, and the strength of competitors. Such reminders are not conducive to driving sales up, and are likely simply to increase anxiety about buying the brand. The unconscious mind will be asking itself, “Having heard all that, if I bought one now and it went wrong, how stupid would I feel?”
Experience from the UK of Rover going under gives some clues about what consumers might expect: bargain prices, problems getting spare parts and mediocre cars. To be fair the cars were mediocre before the company ran into problems, hence the difficulty getting people to buy them at profitable prices and the spiral into loss!
Chapter 11 will mark a significant step towards the end of General Motors. Consumers will have good reason to be wary of buying and no shortage of reminders (through the media and discussions with friends) that buying a GM car is an unjustifiable risk; GM car dealers will be the last line of defence.
Philip Graves
General Motors has been on life support for quite some time and if it weren’t for Government support it would have gone the way of the dinosaur awhile ago.
As much as I like the old Chevelle and Camaro it is best to let the company die. That being said people should not buy a GM car. It would be unwise.
Steve Chambers, The Sales Expert
Sales Eagles – Sales Coaching for high flyers
I didn’t hear this news about GM Filing for Chapter 11. I’m glad I read your post because at first I was thinking what a great opportunity to buy a new car cheap. I didn’t think of what would happen if there was a recall etc. but company to send it back to.
Lisa McLellan, Babysitting Services – Babysitters, Nannies, and Au-pairs
That was a long time coming. I couldn’t see myself buying a GM car ever except maybe a cadillac but that would even be stretching it. They suck and this is what happens when you suck. You lose. The sad part is that so many good people who work their asses off are going to lose bigger. That’s a shame.
Anthony
Achieve the Inner Balance of a Zen Monk
@Anthony Lemme
“…this is what happens when you suck. You lose.”
Hilarious and true.
If only one of the many consultancy firms they’ve no doubt employed over recent years could have delivered such a succint analysis of their situation!
Philip
Bankruptcy is the only way they can renegotiate their ridiculous union contracts. The unions are what drove them into the ground with their impossible demands and feathernested retirement plans. With that said, the executives did sign off on these contracts altho they had little option.
I know Chrysler is on the brink as well as GM. Should provide an opening for Ford. If people are buying fewer cars, it stands to reason that we need fewer car companies…
Seize the Day,
Rob
Sales Tactics For Small Business Owners
Personal Asset Protection For Small Business Owners
I with Rob – Between the unions and truly mediocre designs, GM should have been dead years ago. Circle of life. Some pain now will make us all stronger. Delay the death and we all suffer.
Christian Haller
Good Food Fast & Easy
Healthy Italian Recipes
Given the possibility of bankruptcy, I would not buy a GM car. Hmmm. Come to think of it, even if they were not going bankrupt, I would not buy a GM car. I can’t think of a GM model that appeals to me.
Health, Fitness — Darryl Pace
Fitness Product Review
I am 100% opposed to government buyouts of private businesses. If they can’t stand on their own, they SHOULD collapse, and let something better take their place. Isnt that what captilism is?
SunnyMarie
http://www.sunnymarie.com
Good analysis.
I particularly enjoyed Anthony’s comment “this is what happens when you suck. You lose!”
Haha! 🙂
JJ Jalopy.
Coaching Business Expert JJ Jalopy
How to become a coach
Interesting….as I write this, Chrysler is within a breath of filing for protection and there is additional talk of a merger.
I’ve lost track of the massive amount of money that has been fed to these companies already….is it me or does it make sense to pump so much capital into institutions that not only produce products that few buy, but seemingly have no concrete plans to do anything really differently?
JC
JC
Butterfly Marketing
I am to the point where I really don’t care anymore about all of this. It doesn’t matter. What will happen will happen.
Bob Kaufer
Z Health For Life
My question is, “Why should any company be bailed out” These companies are public companies with ridiculous salaries and overpaid UNSKILLED workers.I lived in a town with a GM plant.
I used to play basketball with a person whose job was to be there in case someone became sick. He was paid 8 regular hours and an overtime hour each day. he said he slept an average of 7 hours a day. Both my father and grandfather were union workers but what is right is right and what is wrong is……bailed out by the government. Mark
small business marketing
ice cream marketing
Why give the public’s money to a company that has clearly demonstrated over a long period of time that it is incapable of managing its finances and makes a shitty product!
Nobody would come bail out my pop’s store or Mark’s Ice cream stores if he was incapable of managing them properly!
Its criminal!!
Duane
Super-ADVANCED Influence & Persuasion Training Proven to Quickly Create a Flood of Money Constantly & Continuously Flowing into YOUR Bank Account Like the Niagara Falls… 100% GUARANTEED!!
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We refer to this as stealing my money for someone else’s agenda in an area in which the government has no purview.
And who will support the car with parts in the future?
Best regards,
April Braswell
Dating Quick Start Expert, Relationship Success Coach
Divorce Support and Bereavement Support seminar, Henderson, Las Vegas
Phil,
Survival of the fittest is the commercial realism. Muddling with it serves no one well in long term as it discourage responsibility.
John Ho
Numerology Expert Helps Understanding Personalities for Better Influence & Persuasion (WordPress Blog)
Numerology Expert Helps Understanding Personalities for Better Influence & Persuasion (Money Page)
Instead of it being General Motors – we refer to it as “Government Motors.” Billions after billions flushed down the toilet and we’re still at the same point we were years ago – the company has an unsustainable lust for cash becuase they entered into contracts that could never be sustained. The government should have let the free market determine the outcome of this one!
And we expect different results if we let these clowns run our health care…??? GEEZ!!!
Pam
Invest in Your Future
I agree with Anthony. the problem is right now our government sucks…..
but it doesn’t lose we do.
Don Shepherd
Fishing Central Oregon
My father said years ago that they couldn’t run fast enough to give him a cadillac. They haven’t been running very well for a long time. Now the question is: Does the government have first rights on any dollars left or does the US taxpayer get screwed again?
Pat
Internet Dollars for Business Owners
Im not sure what all this means but Im learning!!!
David Power’s Hour
Expert in Hypnosis, Success Thinking and Practical Parenting