The reappearance on the ticker of Big Three automaker General Motors caused a stir yesterday on Wall Street. The debut was met with an unusual amount of enthusiasm from investors, as the price for GM stock ended the day at $34.19 per share.
This was a slight dip from the day’s high of $35.99, but still a very strong showing by the troubled company. GM has said that from a high of 40 percent percent government ownership, after paying off some of their debt, etc., that number is now closer to 25 percent, which bodes well for their future showings.
Understandably, the news of GM’s resurgence is being met with cautious enthusiasm across the board. The fall of GM two years ago, along with the bank bailout, caused a ripple effect in the U.S. economy that the country still hasn’t recovered from. The layoffs that GM instated, along with the cut in the number of dealerships they allowed and the slashing of some of their high-profile brands – Pontiac, Saturn, and Hummer, among others – devastated an already-suffering economic situation, particularly in the Midwest, where the Big Three has traditionally been seated.
The Wall Street Journal reported on GM’s debut, of course, and the mood seemed cautiously optimistic. Several quoted investors, however, expressed the obvious sentiment that while the debut was good, GM has to maintain its momentum in order to truly recover.
GM’s recovery strategy started with both layoffs and pay cuts of up to 10 percent per employee, as well as a much lower starting rate-of-pay, almost 40 percent less than it has been in the past. They have also instituted an aggressive redesign of their automobiles, concentrating on their major brands – Chevrolet, Buick, and Cadillac, which has seen them reap benefits in “car of the year” awards and much higher sales and consumer confidence.
This has the potential to truly be GM’s year. The stock debut is very encouraging. That, coupled with the overall quality hike in the cars coming off the assembly line and the much-improved word-of-mouth could do wonders for setting this company back on its feet in a big way. Because GM was so aggressive about trying to make it look like they took the shame of their bailout seriously, and made PR-friendly moves like paying off debt early, they look far better than many.
But they have to make it stick, and that’s where it gets tricky for any business these days. One misstep, and GM could lose valuable ground. The auto market is ruthless anymore, and GM so far has shown that they understand that. Here’s hoping they continue to be as aware of public perception as they have been the last two years.
Workforce.com, ” GM’s Downsizing Strategy Moving with Great Efficiency .”
Steven Russolillo, ” US Stocks Surge on Easing Ireland Worries as GM Debuts .” WallStreetJournal.com