What if GM didn't take the bailout?

[RobbieL2415]

I would have allowed GM to go Chapter 7/liquidation when they were in their deepest trouble a few years ago.  They had been actively selling off divisions for many years before then.  Any of the remaining remnants with any value would have then been taken over by other companies and they were have continued on a much stronger, better position.

Mike

I've always wondered about this. Would GMs assets be sold off in pieces or would they use them to pay off creditors and cease to exist.  And GM is huge.  It had, as of 2008:

9 wholly-owned automobile brands (Chevy, Buick, GMC, Cadillac, Pontiac, Saturn, Hummer, Holden, Vauxall, Opel), and one with majority stake (Saab)

A parts division (ACDelco)

A repair division (then known as Goodrich)

A financier (GM Financial)

10 global subsidiaries

How would you go about setting things straight?

[Richard3]

A repair division (then known as Goodrich)

...wasn't Mr. Goodwrench?

A financier (GM Financial)

...wasn't GMAC?

[Scott5114]

A financier (GM Financial)

...wasn't GMAC?

GMAC was sold off in 2006 and later became the firm now known as Ally. GM Financial was purchased in 2010 to replace it. Before it was sold off, GMAC had gotten into a bunch of other banking-type-stuff, like mortgages, that had nothing to do with cars, so it didn't really make a whole lot of sense as a part of GM.

[Stephane Dumas]

I guess Opel and Vauxhall in Europe would had ended in the hands of Peugeot-Citroen like it did currently. 

Penske would had tried his luck with Saturn.

[hbelkins]

GMAC was sold off in 2006 and later became the firm now known as Ally.

Which would explain why they're on the hood of the 48 car.

[Rothman]

A financier (GM Financial)

...wasn't GMAC?

GMAC was sold off in 2006 and later became the firm now known as Ally. GM Financial was purchased in 2010 to replace it. Before it was sold off, GMAC had gotten into a bunch of other banking-type-stuff, like mortgages, that had nothing to do with cars, so it didn't really make a whole lot of sense as a part of GM.

Japanese keiretsus have little issue with multiple types of businesses under one umbrella. 

[Max Rockatansky]

Realistically having GM going under would be a disaster for the economy.  More so the company was worth way too much intact than it was broken up into pieces.  Even if GM went up on the sales block I can't imagine that the end result would have been all that different than what was seen in the bailout; several divisions shuttering and side businesses being spun off.  I do think Pontiac might have ended up surviving if investor money went into buying out GM.  Pontiac almost ended up making it in the government bailout given that the division was planned to be different.  The reason Pontiac went down during the bailout was that it wasn't profitable for a long time...hence why Buick actually lives on.

[SP Cook]

GM's plants would have been sold to other companies who would have selected union free applicants to produce quality cars and trucks at a fair wage under reasonable working conditions.  Net effect on US economy?  Short run pain, long term massive gain.

[Scott5114]

A financier (GM Financial)

...wasn't GMAC?

GMAC was sold off in 2006 and later became the firm now known as Ally. GM Financial was purchased in 2010 to replace it. Before it was sold off, GMAC had gotten into a bunch of other banking-type-stuff, like mortgages, that had nothing to do with cars, so it didn't really make a whole lot of sense as a part of GM.

Japanese keiretsus have little issue with multiple types of businesses under one umbrella. 

Japanese businesses are run very, very differently than American ones, though. Japan had a construction company that lasted for 1,428 years before being bought out...

[Henry]

Surely, Detroit wouldn't allow that to happen, but if it did, the auto industry here would be monopolized, with Ford being the only player in town (because the same question would also apply to Chrysler), and that would prove disastrous in the long run. But I guess in an alternate universe, the remaining GM divisions would either become their own companies or get absorbed into other established companies, most likely from Europe or Asia (like Italian firm Fiat did with Chrysler to form FCA). Their success in China is the main reason that they survive today.

[Rothman]

A financier (GM Financial)

...wasn't GMAC?

GMAC was sold off in 2006 and later became the firm now known as Ally. GM Financial was purchased in 2010 to replace it. Before it was sold off, GMAC had gotten into a bunch of other banking-type-stuff, like mortgages, that had nothing to do with cars, so it didn't really make a whole lot of sense as a part of GM.

Japanese keiretsus have little issue with multiple types of businesses under one umbrella. 

Japanese businesses are run very, very differently than American ones, though. Japan had a construction company that lasted for 1,428 years before being bought out...

Sure.  Maybe we need to take a page from their practices.

[Scott5114]

A financier (GM Financial)

...wasn't GMAC?

GMAC was sold off in 2006 and later became the firm now known as Ally. GM Financial was purchased in 2010 to replace it. Before it was sold off, GMAC had gotten into a bunch of other banking-type-stuff, like mortgages, that had nothing to do with cars, so it didn't really make a whole lot of sense as a part of GM.

Japanese keiretsus have little issue with multiple types of businesses under one umbrella. 

Japanese businesses are run very, very differently than American ones, though. Japan had a construction company that lasted for 1,428 years before being bought out...

Sure.  Maybe we need to take a page from their practices.

As long as it's the right page. Taking the long-term approach instead of chasing growth quarter-by-quarter? Absolutely. The cultural expectation not to rock the boat to avoid your boss losing face, and the long hours? They can keep those.

[Rothman]

A financier (GM Financial)

...wasn't GMAC?

GMAC was sold off in 2006 and later became the firm now known as Ally. GM Financial was purchased in 2010 to replace it. Before it was sold off, GMAC had gotten into a bunch of other banking-type-stuff, like mortgages, that had nothing to do with cars, so it didn't really make a whole lot of sense as a part of GM.

Japanese keiretsus have little issue with multiple types of businesses under one umbrella. 

Japanese businesses are run very, very differently than American ones, though. Japan had a construction company that lasted for 1,428 years before being bought out...

Sure.  Maybe we need to take a page from their practices.

As long as it's the right page. Taking the long-term approach instead of chasing growth quarter-by-quarter? Absolutely. The cultural expectation not to rock the boat to avoid your boss losing face, and the long hours? They can keep those.

Heh.  Yep.

[Stephane Dumas]

Surely, Detroit wouldn't allow that to happen, but if it did, the auto industry here would be monopolized, with Ford being the only player in town (because the same question would also apply to Chrysler), and that would prove disastrous in the long run. But I guess in an alternate universe, the remaining GM divisions would either become their own companies or get absorbed into other established companies, most likely from Europe or Asia (like Italian firm Fiat did with Chrysler to form FCA). Their success in China is the main reason that they survive today.

A bit ironic is in the late 1950s-early 1960s, George Romney, father of Mitt Romney, back when he was president of AMC before he become governor of Michigan, called for GM and Ford to be split in 2 or 3 parts.
https://www.wardsauto.com/flashback/wardsauto-flashback-february-2017  Just imagine GM splitted in smaller companies like Standard Oil and AT&T who become "Baby Bells".

Testifying at a Feb. 7 hearing by the Senate Subcommittee on Antitrust and Monopoly, George Romney, president and chairman of American Motors, calls for splitting GM and Ford into two or three parts. At the same time, he urges UAW bargaining power be dispersed by "prohibiting the combination of national unions for the establishment of common bargaining demands or use of economic power."  The auto executive further testifies the maximum percentage of total sales for any industry obtained by one company should be fixed by law. He recommends the limitation be set at about 35% for a company not engaged in more than one basic industry and 25% for those that are. The ultimate aim, he says, "is to prevent combinations of employers or unions from destroying the competitive system."  

[Max Rockatansky]

Surely, Detroit wouldn't allow that to happen, but if it did, the auto industry here would be monopolized, with Ford being the only player in town (because the same question would also apply to Chrysler), and that would prove disastrous in the long run. But I guess in an alternate universe, the remaining GM divisions would either become their own companies or get absorbed into other established companies, most likely from Europe or Asia (like Italian firm Fiat did with Chrysler to form FCA). Their success in China is the main reason that they survive today.

A bit ironic is in the late 1950s-early 1960s, George Romney, father of Mitt Romney, back when he was president of AMC before he become governor of Michigan, called for GM and Ford to be split in 2 or 3 parts.
https://www.wardsauto.com/flashback/wardsauto-flashback-february-2017  Just imagine GM splitted in smaller companies like Standard Oil and AT&T who become "Baby Bells".

Testifying at a Feb. 7 hearing by the Senate Subcommittee on Antitrust and Monopoly, George Romney, president and chairman of American Motors, calls for splitting GM and Ford into two or three parts. At the same time, he urges UAW bargaining power be dispersed by "prohibiting the combination of national unions for the establishment of common bargaining demands or use of economic power."  The auto executive further testifies the maximum percentage of total sales for any industry obtained by one company should be fixed by law. He recommends the limitation be set at about 35% for a company not engaged in more than one basic industry and 25% for those that are. The ultimate aim, he says, "is to prevent combinations of employers or unions from destroying the competitive system."  

The sad thing is that there is a lot of evidence to support the theory that GM and Ford attempted to purposely shed market after those monopoly scares.  Some of real poor product offerings by GM in particular in the 1970s have been rumored to be rank jobs.  How true that is I don't know, the malaise era spun up a ton of garbage throughout the entire automotive industry. 

[nexus73]

No bailout would have led to lots of suppliers closing, so many that Ford and Chrysler would have also been at risk of closing due to the loss of those suppliers.  That was what the news articles said at that time.  If this was true, the Rust Belt would have been finished.

Rick

[MNHighwayMan]

If this was true, the Rust Belt would have been finished.

The Rust Belt is already finished. What we're seeing now is the slow decay into irrelevance.