General Motors stock took a very depressing dive again Friday as the awful news surrounding the company cut another 41cents off the price per share sending this stock down to a mere $1.45 a share. It is almost unbelievable and very depressing to think that this megacorporation's stock value is now approaching McDonald's Dollar Menu pricing.
For many years, I lamented that major sellers in the marketplace such as GM and Campbell's Soup dominated their markets and were near monopoly powers. It seemed like a daunting to impossible task for competitors to ever challenge these industry giants. I even assumed that the nature of American capitalism meant that some entities were to become dominant sellers, and that marketplace competition is nearly eliminated once these giants control the marketplace. I began to wonder whether "free enterprise" was an empty concept that meant nothing because the trend in the marketplace was for the big to become bigger, and for the small to collapse.
At one time there were many American automobile brands. However, by the 1950's those brand names began to rapidly shrink once Kaiser and Willys left the car making business, and Hudson and Nash formed little American Motors Corporation, and Studebaker and Packard hung on for dear life as two weak brands with serious money troubles, almost like two drunks trying to hold each other up. Within time all of these brands were gone and it was just down to the "Big Three".
During the 1960's it would have been absolutely unthinkable that GM would ever be out of the car business. The big full size Chevrolet models sold 800,000 units one year in the 1960's. This was a number more than twice the number of total cars sold by little American Motors for example. And with such a dominant market share advantage, it seemed impossible to ever accept that GM might be gone as a car maker.
But a number of interesting changes too place over the years. Gas prices sometimes hit huge highs hurting larger American car sales. Import cars chipped into the U.S. market and sometimes exceeded the build quality and reliability of some U.S. brands. Younger buyers lost the sense of brand loyalty of their parents and grandparents. And American automobiles seemed to lose their historic identity and styling cues as well, and often not really looked like the Chevrolet, Buick, Pontiac or other cars that they really were. And automobile executive took huge salary increases for their work, while often making a series of bad business decisions. Some will even blame the autoworkers and their unions as well for seeking great wages, benefits and retirement programs. However, it was the car company management that agreed to these union contract terms. And all seemed well until American car sales plunged and the recession really ruined the industry recently.
Right now, it looks highly likely that GM could be forced into declaring bankruptcy very soon. And whether that means that GM will continue to produce cars in the future or not is a very good question. They will no doubt try to. However, it may not be possible to hold the dealer network together and have enough assets to pay suppliers, etc. GM might now me a lost cause. And Chrysler is another brand that might have great difficulty surviving the worst American economic downturn since the Great Depression as well. Only the careful management over at Ford seems to be keeping this company afloat as the only likely survivor of this huge economic downturn.
It is indeed frightening when the once high priced GM stock is now approaching the price of items on the McDonald's Dollar Menu. American Motors stock was delisted before it hit such absurd lows as this when it was selling in the $3 area. A $1.45 stock price is a very serious bad omen.
Note: Wizbang Blue is now closed and our authors have moved on. Paul Hooson can now be found at Wizbang Pop!. Please come see him there!