Would You Buy General Motors?

Our government has shoveled billions of dollars into large corporations that have been deemed "too large to fail". Among them are AIG insurance and General Motors. Both of these companies suffered from poor management decisions and both have gotten billions of taxpayer's dollars and are asking for more billions to help insure their survival at a time when average Americans are asking where it will end. It seems that neither of these "giants" learned anything from the financial meltdown and economic disaster. The problems that caused the failures didn't happen overnight and I suspect that the corporate management had their collective heads buried in the sand or were just hoping that the problems if ignored would go away. You can't be at CEO level without knowing your company is loosing money.
But, the question is; why buy General Motors? A question asked during a casual conversation, but one worth considering. Why would anyone buy General Motors? Their own auditors recently reported that it was unlikely that General Motors could continue as an entity. The company is wracked by debt, contracts and commitments won by the union over many years. The pension plan for GM workers is so generous that a large part of every car sold has to go to the retirement plan. General Motors is facing and will probably go into bankruptcy.
Poor quality, too many models, too many combinations available to the customer and too much competition from foreign manufacturers contributed to the problems at all three American auto makers. Some of us are old enough to remember when there were less of all these things. A long time ago (this sounds like a lead in to a George Lucas film) there were basically two models to choose from. You could count on this year's deluxe model being next year's standard model. Every two years, the auto manufacturers would retool and bring out new models.
Go back in history or to an antique car show and look at the models available half a century ago. For instance, the 1949 and 1950 models shared the same basic body design with different tail light and grill treatments. The same thing is apparent with the '51 and '52 model years. The first year that this pattern didn't repeat was in 1957. Think about the '57 Chevy, Ford and Chrysler models. All were different from the preceding years and would be different from 1958 models when all three manufacturers started making larger "boat-like" cars. Remember, back in the 70's when we could count on the paint peeling off the cars in three years. Sometimes a new car would seem to spend more time in the dealer's service shop than our driveway.
In recent years, quality and dependability from our big three manufacturers has improved, but there are too many models, and too many different combinations of the same vehicle. It might be a good idea to adopt a business model used by a more successful competitor or at least scale back to a sustainable level. The management style at the big (?) three doesn't appear to be changing.
Is GM too big to fail? In this economic mess, someone's got to fail and declare bankruptcy. GM is the most likely candidate. Bankruptcy is not necessarily a bad thing. It would give them some breathing room from creditors, and may allow a restructuring of the contracts with the unions while the company is restructured in a manner that might allow it to make quality cars and trucks in a manner that is competitive with foreign manufacturers. GM could be broken up into smaller, autonomous business units.
A bankruptcy might have a ripple effect on a lot of suppliers and vendors, but if GM is not selling vehicles, there is going to be some down stream suffering but General Motors is not the only customer for most auto suppliers and other auto makers will have to pick up the slack in the short term.
Back to the original question, why buy GM. I don't believe that GM will go away. It might get broken up and some divisions might be sold off, but I believe that GM will still be here. However, the opportunity for shareholders to get anything will be remote. Everyone will loose something, but the stock is almost worthless now. The uncertain future of General Motors as it is today makes it a poor investment choice. But then, I'm not a financial advisor. I could be way off on my assessment of the situation with General Motors and Chrysler. The vast amount of taxpayer money used to bailout companies that are still paying bonuses of more than I'll earn in a lifetime might also make me less than sympathetic.
If you are interested in investing in one of the auto makers, get the best advice you can and be prepared to stay in the market for a long time. When the economy recovers, any investment in companies that have received bailout money should have a good return as consumer confidence increases and time dulls the anger over the causes of the recession and the bailout of these large companies.
As I stated earlier, I'm not a financial planner, but I know what I like and it might be possible to parlay a small investment into a larger investment with enough luck and patience.