General Motors to File for Bankruptcy

Decades of decline and seven months of negotiations with its union, creditors, and the U.S. Treasury Dept. will culminate in an historic bankruptcy for General Motors (GM) in New York on Monday morning, June 1, senior Obama Administration officials and company sources said Sunday night.

The company will still face a horribly slumping economy, and it will have to fight its own battered image. But if American consumers give the new GM a look, it could finally emerge a winner.

The Impact Of Chrysler's Bankruptcy

The U.S. government has described Chrysler's action as a "prepackaged surgical bankruptcy," through which it hopes the company will be able to exit the bankruptcy process within 30 to 60 days.
If Chrysler achieves this, it will emerge with a new global partnership with the Italy-based Fiat . Instead of cash, Fiat will provide the equivalent of billions of dollars in research- and investment-related (R&D) investments for a 35% stake in the new Chrysler.

However, many experts think a quick trip into (and out of) bankruptcy might be unrealistic.

U.S. Auto Sales on Track for Worst Year Since 1970

As bad as things are for Chrysler, which just declared bankruptcy, and for General Motors, which is also on the brink, it’s worth repeating that U.S. sales are nearly as bad for Toyota, Honda and Nissan, too.

That says buyers are sitting on their wallets regardless, despite deep discounts. Incentive programs from Ford, GM and Hyundai will even pick up your car payments if you lose your job.

A comeback in demand for cars and trucks remains remote as ever, as the seasonally adjusted annual sales rate for April 2009 was about 9.3 million units, according to AutoData Corp. That’s an estimate of how many cars and trucks the industry would sell in an entire year, based on the monthly sales rate in April.

Chrysler’s Fall May Help Obama to Reshape G.M.

Fresh from pushing Chrysler into bankruptcy, President Obama and his economic team are hoping that the hard line they took last week gives them leverage to force huge changes in General Motors, a far larger and more complex company.

Officials say that, difficult as Mr. Obama’s decision was on Wednesday to take all the risks of a Chrysler bankruptcy, the politics of reshaping G.M. will be far harder. Already a shadow of the company that once dominated the American landscape, G.M. will be forced to eliminate tens of thousands of additional jobs and close factories and dealerships nationwide.