GM Is Going to Need Another Bailout

It will probably go broke in a few years: Forbes' Louis Woodhill
By John Johnson,  Newser Staff
Posted Aug 16, 2012 3:33 PM CDT
A Chevrolet Malibu 1.6T is displayed at the Beijing International Automotive Exhibition in Beijing in April.   (AP Photo/Alexander F. Yuan)

(Newser) – The feds may have bailed out GM once, but the way things are going, the company is going to need Round 2 in the near future, writes Louis Woodhill at Forbes. The numbers aren't pretty: The US still owns 26% of the company and would need about $53 a share to break even, a far cry from the current price of $20. That adds up to a current "unrealized loss of $16.4 billion," writes Woodhill. "GM is unlikely to hit the wall before the election, but, given current trends, the company could easily do so again before the end of a second Obama term."

To understand the problem, consider the Chevy Malibu. It's GM's entry in the all-important "D-Segment," featuring family sedans such as the Honda Accord, the Toyota Camry, and the Ford Fusion. If GM hopes to survive, it needs a winner here, and the Malibu is anything but. The 2013 version now being rolled out falls flat against the competition in design, comfort, and performance, and its next redesign won't come for another five years. "Uh-oh," writes Woodhill. If Obama wins again, he better start figuring out how to justify a second bailout of the company and its UAW workers. In the meantime, he "might want to be a little more modest about what he actually achieved by bailing out GM the first time." Click to read Woodhill's entire piece, which also explains why Volkswagen is such a threat. (Read more General Motors stories.)

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