Is GM Headed For Breakup?

With the latest US bridge financing for the 'Big 3' dead on the Senate floor, one has to wonder what will become of them.

Chrysler will shrink to a shadow of its former self. (Those old enough to remember their show rooms in the early 80s will remember walking into a room full of K-platform cars and leftovers from the mid-70s. This time around, I suspect the remains will include a minivan, and possibly something based on a Mitsubishi platform ... and not much else.

GM on the other hand could be headed for a fate not unlike what happened to AT&T/Bell in the early 80s. GM has a couple of brands that I suspect will survive in some form or anther. I can see Chevrolet, Pontiac and Cadillac remaining fairly intact; Saturn will likely become a brand used to label whatever they can import from Europe and Korea. (Not unlike GM's ill-fated "Passport" and "Geo" brands - hopefully better managed than that...)

Buick will vanish - at least in North America, and I suspect the 'GMC' branded trucks will also go away - being otherwise identical to their Chevrolet-branded cousins.

Just at a guess, we'll see the following companies emerge from a GM bankruptcy in North America ("MiniGeMs"?):

1. Chevrolet - Mostly producing family cars and light trucks
2. Pontiac - Will try to position itself as a "near luxury" brand competing with Acura
3. Cadillac - Will continue to be Cadillac
4. Saturn - Will mostly become a dealership network selling rebranded Opel product.
No speculation on what will happen with their holdings in Europe and Asia - I simply don't know enough of GM's current holdings over there

All of those companies will be producing in much reduced volumes from today, and I expect their lineups to be trimmed dramatically.

Any guesses as to what shape GM takes on after a bankruptcy filing is, of course, purely hypothetical - based far more in my imaginings than anything even remotely real.

What the impact of a dramatic reshaping will be on the US and Canadian economies will be is hard to say - I'd have to imagine that it will be messy in the short term until the new companies start to take shape and fill the gaps. I expect the stock markets to take a nosedive on this, not because it's warranted, but because the stock markets are run more on emotion than on anything resembling rationality. Sit back, and hold on.

Consequences...

In the US elections this month, voters in California had before them a ballot item called Proposition 8. Proposition 8 was an amendment to the state constitution that for all intents and purposes banned gay marriage.

The campaign itself was contentious, and particularly notable was the fact that the LDS Church became very publicly involved - sinking millions of dollars into the Pro-Proposition 8 campaign.

As Benediction Blogs On points out, one has to imagine that there will be consequences of some sort for the LDS church, and in particular its members.

There are some legal challenges being raised against Proposition 8 itself, although I have serious doubts as to their viability.

More interesting is this story over at BoxTurtle Bulletin. In terms of smart thinking - you own a business that has a large clientele, it's probably not the best idea in the world to make a public donations to a cause that strips rights away from a big chunk of your clientele.

I imagine that there will be a few businesses in parts of California that will find a big chunk of their clientele picks up and goes elsewhere - especially if the business or its owner is linked to pro-Proposition 8 in some way. Sadly, that may be by no more than simple association with a particular faith - but such is the price that many will pay in response to the very public support their church leadership gave to Proposition 8.