Editorial: Take Your Seat

By Light & Medium Truck

If you get a call from the Obama administration, don’t hang up. It may be an invitation to take a seat on the board of directors of a new automobile company.

General Motors’ June 1 bankruptcy was a historic step, not only for the company but also for its new majority stockholder.

After providing bailout loans in the amount of $20 billion, and then agreeing to finance the “new” GM with another $33 billion or so, the U.S. Treasury and, by extension, we, the taxpayers, will end up being the majority stockholders with about 60% ownership in one of the world’s iconic companies. We also will own a piece of the “new” Chrysler.

How does that make you feel: rich, or responsible? You now have a vested interest in the success and performance of these companies.

Another way to look at this is to realize you now have a raft of new contacts to call if you have a gripe about something. Perhaps the wiper motor failed prematurely. Call up a fellow board member.

GM’s financial numbers could be mind-numbingly large, with the arc between its profits and losses sometimes as wide as a Hummer’s track.

GM reported $41 billion in profits in the decade leading up to 2004, according to Bloomberg News, and then promptly followed that up by losing $80 billion from 2004 to 2008.

At bankruptcy, GM recorded assets of about $83 billion and debts of more than $172 billion. Its stock had fallen so far that the company’s market capitalization was $459 million, according to the Washington Post, down from $59 billion in 2000.

As Joe Howard, L&MT’s managing editor, noted, most pro sport teams are worth more.

GM is hoping for a quick bankruptcy, emerging as a smaller, leaner new GM by Sept. 1, if not sooner.

It will not be business as usual for GM commercial truck users, however. The company gave up on its long-time efforts to sell the Chevrolet Kodiak and GMC Topkick medium-duty trucks and said it will shut down production at the end of this month.

Disappointing, but not unexpected. The brands had been on the market for years but, as one GM spokesman said, the deals were never just right.

The move certainly helps the remaining players in that crowded light-medium sector. GM sold just fewer than 25,000 units in classes 4-7 last year, albeit a down year for sales. Combine those trucks with the 4,489 medium-duty units reported sold by Sterling Trucks, another brand leaving the market, and you have almost 30,000 units to be divvied up by the remaining brands.

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