In a stunning, surprise move, General Motors announced, last week, that it would not need a $2 billion infusion of cash from the federal government. Ever since then, my phone has been ringing off the hook, with friends, industry contacts and talk show hosts alike asking me what this news signifies.
In today’s 24/7 news cycle, the issue is proving to have plenty of “legs,” and when I was asked to comment on NPR, this evening, I thought it time to stop giving glib opinions and think more deeply about the meaning of impact of GM’s decision.
The most common question is why did GM decide to skip this tranche of aid? According to the automaker, it has made far more progress than it originally anticipated slashing its costs and rebuilding its under-funded war chest. Certainly, if the company has enough cash on hand to meet its obligations, it would seem logical to avoid borrowing still more money and running its huge debt load even higher.
But Is GM really that much ahead of where it expected to be right now? (more…)