GM Posts A Loss, But Says It’s Better
I get the concept of looking at bad things in a good way. Still, seeing General Motors say that they lost $1.15 billion, yet will still be able to start paying off the bailout money from the government, seems, well, strange.
Yet, that’s what they’re saying, as they also announced that they’re sitting on cash reserves of more than $3 billion. In my mind, they’re speculating that things will stay as they are now, as they increased revenues by $28 billion in the third quarter, probably due to the Cash for Clunkers program, which hasn’t been extended.
Or are they? At the same time as announcing this stuff, they also said they expect a bad 4th quarter as it pertains to cash. The only thing I can think of is that they expect their expense position to improve when some of the 6,000 dealerships they’re ending their association with start closing up. That’s supposed to allow them to reduce all their costs and expenses because they’ll only be supplying cars to those dealerships that have proven to know how to move cars, and they can make fewer of them. They’ve also been able to reduce their own personnel, and are shutting down both Saturn and Pontiac, two brands that I thought were much better than their normal brand, but hey, what do I know about cars?
Since General Motors didn’t have to start paying any money back until 2015, and, in my mind, their financial position is still kind of tenuous, I have no idea why they’re doing this so soon. I think they’re hedging their bets, and if that’s the case, then this could all fall flat and could hurt a lot of people down the line. I shoulder no animosity towards these folks, and wish them well, but I just can’t see the financial sense in making this declaration and starting to make these payments now.