GM delays payments to dealers to conserve cash

[IDemo]

Source: Associated Press

updated 11 minutes ago

DETROIT - Cash-strapped General Motors Corp. said Monday it will delay reimbursing its dealers for rebates and other sales incentives, an indication that the company is starting to have cash-flow problems.

Company spokesman John McDonald said payments due Nov. 28 will be delayed for two weeks until Dec. 11, while those due Dec. 4 will be paid Dec. 18. The normal weekly schedule will resume after that. He would not say how much money the company will save from the delays.

GM said Nov. 7 that its cash situation was so dire it may reach the minimum required to run the company by the end of the year. Executives from GM and its Detroit-area counterparts are scheduled to appear at congressional hearings this week to seek $25 billion in loans from the federal government.

Van Conway, a mergers and acquisitions expert and partner with Birmingham, Michigan-based Conway & MacKenzie, said the delay is a sign the company knows it will run low on cash, and dealers may be most able to take the hit without hurting the company.

Read more: http://www.msnbc.msn.com/id/27773708/

[notadmblnd]

1. I wish I could pay my bills when I felt like it.

[amdezurik]

2. betcha that "minimum" could be a lot lower

except they need to cover all the executive "performace bonuses" don't ya know!

[tclambert]

3. Just heard an expert on TV say the US car companies will be more profitable than ever in a couple of

years, if they can survive that long. Sorry, didn't catch his name. He must be an expert, though, 'cause he was on the TV. :sarcasm: Yet I believe the part about their profitability in two years.

The credit crunch has really hurt all car companies, not just US companies. Everybody buys cars with credit. If it gets harder to get loans, it gets harder to buy cars.

[thereismore]

5. If they are still around, and if somebody steps on their toes re: MPG! nt

[underpants]

8. It's all UPSIDE BABY!!!!

That's funny. He must be the only one who thinks that they are "about to turn the corner" which is what alkies and druggies say....just one more baby you'll see

[IDemo]

4. The vulnerability of the dealer network is something we don't hear a great deal about

I think of auto sales as having four critical table legs: manufacturers, dealers, (willing) consumers, and available credit. It won't matter much if the Big 3 are bailed out if any of the other three legs of the table aren't there.

[Hardrada]

6. Wasn't this the plot of the movie Fargo?

[underpants]

7. I find it hard to believe that they can do this in a contract situation

even if they can it shows the desperation.

[naaman fletcher]

9. its a game of chicken..

Not paying your suppliers on time is a game of chicken.. they are doing it in this case to spread the pain to build more public support for a bailout.

[underpants]

12. Welcome to DU

:hi:

[customerserviceguy]

13. I would think

that the dealer network would already be fully behind a bailout.

I would also think that this particular action would make it less likely that a dealer would want to tell a customer about a rebate, or try to screw them out of it in some way.

Perhaps the whole dealer network thing needs to be re-thought. Even in good times, they spend megabucks on wasteful advertising trying to get customers, it may just be that there are too many people trying to sell cars. Clearly, the Internet has changed car buying, you can instantly shop a large number of dealers for pricing on a particular model, that's not something the dealers had to fight fifteen years ago. You'd find some customer that wanted to "shop", and you'd try to impulse-sell him on whatever you had in your inventory. These days, the customer can say, "No thanks, I have three other places to look for a 2005 Widget sedan."

[BeatleBoot]

11. Wait and see what they can do contractually when

they are bankrupt.

I just lived through it with a bankrupt auto supplier.

It will accelerate our economy into a depression.

[Romulox]

14. Of course they can. It's called insolvency, and the next step is bankruptcy.

[BeatleBoot]

10. "Starting to have cash issues"

Starting?

:rofl:

Wow, I'm waiting for people to catch up here.

[Romulox]

15. There are still DUers who are apparently ignorant of the $3 trillion Wall Street bailout

posting "let the MARKET decide!" on Big3 bailout threads. :silly:

[DainBramaged]

16. It is getting to be like a National Lampoon movie around here

:hi:

[sarcasmo]

17. Your screen name says it all. This is all about destroying the union and another year of Bush would

have finished all three companies.