When GM gave up control to Cerberus, they got in a pickle...It [Cerberus through GMAC] has taken away flexibility from dealers" (Welch 2008). "GMAC also said it will suspend bonuses to dealers who earned the lender's Platinum designation for bringing the firm strong buyer volume" (Welch 2008). This essentially discourages dealers who engage in hard-sell tactics, and encourages consumers to take on 'more car' than they can afford. But the belt-tightening comes at a time when GM desperately needs to raise its sales: "GM is burning through at least $1 billion a month. It had access to about $21 billion cash and $5 billion in available credit at the end of June but an analyst Friday said the automaker will probably need $10.3 billion in fresh cash through next year to maintain a minimum liquidity of $14 billion (Snell & Tierney 2008)
Cerberus is likely to play an increasingly critical role in GM's future as merger talks are continuing between General Motors and Chrysler. Chrysler is owned by Cerberus Capital Management. As part of a merger deal, GM might contribute some or all of its equity in the finance company to Cerberus (Vlasic 2008). "But people close to the merger talks said that Cerberus had proposed to contribute cash to GM-Chrysler in addition to the estimated $11 billion in reserves that Chrysler has on its books. In return, Cerberus would receive equity in the combined company and become a large shareholder" (Vlasic 2008). Cerberus, industry analysts speculate, would actually like total, 100% control over the GMAC mortgage and auto loan unit and to sell Chrysler to GM entirely (Snell & Tierney 2008).
Insiders believe that Chrysler, which has a long list of insolvent and outdated car models still in production would not be a sound investment for GM, and GMAC's recent decision to cut off credit lines to all but a few select borrowers may be a ploy by Cerberus to pressure GM to agree to the Chrysler merger. "While GMAC claims the reason for the move is because of the frozen credit markets, its timing seems curious. After all, it seems Cerberus is desperate to dump Chrysler, and has talked with any automaker willing to listen in the...
General Motors Company, commonly called as GM is one of the largest automobile manufacturers in the world. It is an American multinational corporation headquartered in Detroit, Michigan. It has business operations in more than 157 countries around the Globe. It was founded in 1908 as General Motors Corporation; and renamed as General Motors in 2009. The top brands of the company include Chevrolet, Isuzu, GMC, Jie Fang, Cadillac, Vauxhall, Baojun,
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