GM to File for Bankruptcy
The government will provide an additional $30 billion loan to help restructure General Motors which will transfer some its assets to a new and smaller entity that could step outside bankruptcy in 60 to 90 days.
"Now the hard part begins, which is making GM and Chrysler competitive. If they don't do that, then we'll be doing this all over again in a few years," Christopher Richter, auto analyst at CLSA Asia-Pacific Markets, was quoted as saying by Reuters.
"The immediate implication is that the companies are going to get smaller and so market share is up for grabs, which means that rivals like Toyota, Honda, Nissan and Hyundai are going to gain share."
General Motors has already announced that it plans to close the doors of no less than 11 production facilities in the United States, with three more factories to be idled. According to a survival plan the company has sent to the government, the new General Motors will be partially owned by the UAW (17.5 percent) and the company's bondholders (10 percent).
"We do believe, and completely endemic in the president's decision, was a belief that this country can support three domestic successful viable auto companies," a senior Obama administration official close the to President's Task Force concluded.