Wednesday, February 18, 2009

Tipping Point for GM?

Make no mistake, GM's problems have been growing over the last 30-40 years. There is plenty of ineptitude to go around. A number of things led to their downfall, but America's love affair with big SUVs has to be one of the biggest. People love to super size everything, including cars. Carmakers as a rule make more money on large vehicles than small. Lots more. Some used small cars as loss leaders. Until now.

What changed? The price of oil, the price of gas of course. With the price of $4.00 a gallon, people said enough is enough. A fill-up was no longer an option for alot of people. The sudden impact of America's shut down on the highways was a knife in the heart for all of the auto industry's bottom line.

Could the now lower price help in the future? Most would say no, that demand will soon ramp up as the world economy gets back in gear in due time.

Even the worlds most efficient carmakers such as Toyota and Honda are suffering the worst losses in their history.

All this shows that one can not continue to lose money and make it up in volume.
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