GM Loses $84.7M Per Day

Please end this nightmare.  Let GM go the way of a bankruptcy restructuring.  GM's business plan is clearly failed.  Their production capacity and dealership network are too large for the industry's changed fundamentals.  Selling cars built by overpaid workers to maxed out consumers at zero percent financing will not bring the company out of its problems.

I have not been a fan of CNBC's Phil Lebau's reporting on GM as he comes off more as a lobbyist.  Here he pulls together the data on GM's disasterous year:

As expected, General Motors posted horrendous 4th quarter numbers this morning with the company losing $9.6 Billion. For all of 2008 GM lost $30.9 Billion making it one of the worst years ever for the auto maker.No wonder it's now on a lifeline courtesy of the Federal government.

Without that lifeline (and a $4 Billion loan) GM would have been dangerously close to not having enough money to run its business day to day. GM ended the year with $14 Billion cash on hand. It needs $11-14 Billion minimum.

That's what happens when you burn through $67.4 million in CASH a day - every single day in the 4th quarter.

This chart provides a good picture of GM's changed fortunes over the decades (Source: Automotive Data Center & R.L. Polk):

As the chart shows GM never properly restructured in the 80s and 90s with the rise of foreign competition.  Hopefully the President's Auto Bailout Task Force restructures the industry with drastic capacity and union wage/benefit cuts.  Doling out money everytime the automakers run out is not a solution. For more of my thoughts on the automakers see: Auto Bailout Task Force Takes Time.