As a result of the falling economy people are being forced to begin to budget their money, taking away luxuries such as coffee, new cell phones and especially new cars. People are not finding an incentive to buy a brand new car when a used car will do the job and save them money. While demand of used cars is increasing, companies like General Motors are suffering significantly and facing the possibility of bankruptcy. The number of new cars being bought through General Motors has dropped significantly in 2008 (by about 11%) and has continued throughout 2009. No one wants to buy new cars with the current economy conditions and are instead finding different solutions.
General Motors has been the number one automaker throughout the world for 77 years. However, what used to be the number one seller for automobile has recently jumped to number two with Toyota taking its place. Gas prices, unemployment rate, and the expectation of the future economy does not leave automakers in a good position. Unexpectedly in the summer of 2008, gas prices soared leaving General Motors struggling and Toyota with a significant advantage with their smaller fuel efficient cars. Before the rising of gas prices, big cars such as SUV’s were popular (especially in America) causing automakers like General Motors to continue supplying bigger cars. The supply outnumbers the demand, leaving General Motors struggling.
With General Motors enduring economic trouble, the government gave them a four billion dollar bailout to ensure their livelihood. The government expected General Motors to find solutions to a more fuel efficient automaker. General Motors is hopeful that government will again assist them financially; otherwise they are expected to file bankruptcy. They have cut jo
bs and closed some of their plants hoping it will help them with their debt, but it has not shown significant changes.
General Motor stock is suffering as a result of the decreased demand for their automobiles. Given their situation I think it would be beneficial for General Motors to start to create smaller cars that appeal to the buyers. Even at that it’s questionable whether or not people would want to spend the money on a new car during this economic trouble.
General Motors has been the number one automaker throughout the world for 77 years. However, what used to be the number one seller for automobile has recently jumped to number two with Toyota taking its place. Gas prices, unemployment rate, and the expectation of the future economy does not leave automakers in a good position. Unexpectedly in the summer of 2008, gas prices soared leaving General Motors struggling and Toyota with a significant advantage with their smaller fuel efficient cars. Before the rising of gas prices, big cars such as SUV’s were popular (especially in America) causing automakers like General Motors to continue supplying bigger cars. The supply outnumbers the demand, leaving General Motors struggling.
With General Motors enduring economic trouble, the government gave them a four billion dollar bailout to ensure their livelihood. The government expected General Motors to find solutions to a more fuel efficient automaker. General Motors is hopeful that government will again assist them financially; otherwise they are expected to file bankruptcy. They have cut jo
bs and closed some of their plants hoping it will help them with their debt, but it has not shown significant changes.General Motor stock is suffering as a result of the decreased demand for their automobiles. Given their situation I think it would be beneficial for General Motors to start to create smaller cars that appeal to the buyers. Even at that it’s questionable whether or not people would want to spend the money on a new car during this economic trouble.
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