In 2008 rising gas prices resulted a 30% drop of sales of sport-utility vehicles which had been General Motors’ most profitable product. Decreasing of sales of SUVs resulted in a cancelation of a 2 billion dollars worth investment program for a new SUV platform. During the first half of 2008, General Motors Corporation lost more than 18 billion dollars and by late October its stock had dropped by 76%. In only a year GM sales in the USA have dropped 45 percent in total. By the end of 2008, 2 of the GM’s companies were closed down, leaving only one factory producing SUVs in the U.S. In late 2008 GM, along with Chrysler, became dependent on government loans to avoid bankruptcy.
General Motors this year's crisis is not the first but coincides with the global financial and economic crisis. GM has been technologically ahead of other companies for decades, but it is now unfortunately technologically behind. European and Japanese automotive industry overtook GM. In the last decade, Japanese and European automotive industry invested a lot of money in new engines and engines with lower power consumption. European and Japanese automotive companies are already mass producing hybrid cars that reduce energy consumption and contribute a lot to a cleaner environment. Even in the U.S. megalomaniacal way of life will have to be adjusted and energy consumption will have to be reduced and GM will also have to adapt this. GM will have to ask for more financial help from the U.S. government in order to survive the downturn in the automotive industry by investing in new engine technologies run by renewable sources. This is the only way of General Motors overcoming this recession.
The Volvo Group is a Swedish merchant of trucks, buses, cars, construction equipment, aerospace components and also financial services. When incorporated in 1915 The Volvo Group was a Swedish ball manufacturer. The Volvo Group became an auto in 1927, when the first car rolled off the factory. Their vision was to build cars that can withstand Sweden's rough roads and cold temperatures. This becomes a feature of Volvo products ever since.
In 1999 Volvo Group sold its Volvo Car Corporation to Ford Motor Company for more than 6 billion dollars, resulting the group now largely set on commercial vehicles. In 2001, Renault , including Mack Trucks was sold to Volvo. As a result, Renault is Volvo's biggest shareholder, with a 20% stake, shares and voting rights.
In the last ten years Volvo experienced rapid growth in the service area. In 2006, Volvo started its expansion in the Asian region by buying 13% of the shares of the Nissan Diesel truck manufacturer, which made Volvo the major shareholder of the Nissan Motor Corporation. Nissan Diesel was later privatized.
However, Volvo's European orders for trucks had dropped about 99%, from 41970 in 2007 to just 115 in the third-quarter of 2008. These losses influenced Ford’s intentions for Volvo. Ford is now keen to sell off its share of Volvo, as it is hardly fighting against recession and the collapsing of the U.S.’s auto market.
Volvo is also in a similar situation to that of GM, since the financial crisis has severe impact on automotive industry. However, Volvo is somewhat in a better position than GM, because it had invested much more in the development of alternative sources than GM. The average consumption of Volvo cars is significantly less than the consumption in GM cars.
The entire global automotive industry is on probation. It is a redistribution of global wealth from industrially most developed and richest countries (G7) onto different countries and continents (G20). This is to create a new world order, which will radically change the world, gradually, new technologies will be invented- new industrialization, attitude to the consumption of energy and living environment will have to change.
If the automotive industry wants to avoid a further downturn, it will have to radically change and technologically adapt to new alternative energy sources. On the other hand, the way of life and how energy is used by the whole humanity will have to change thoroughly. World population is constantly increasing and energy consumption is also increasing and over-polluting environment, which has already reached a critical point. The world had come to a point, when restructuring of the world economy and the automotive industry won’t be sufficient. Humanity needs a new world order, which will fairly divide global wealth among people and revive world economy and the relations towards the nature, by using new renewable energy sources.
SOURCES:
http://www.gm.com/corporate/about/
http://www.hoovers.com/general-motors/--ID__10640--/free-co-profile.xhtml
http://www.kathylien.com/site/carry-trades/dollar-hangs-tight-on-gm-risk-recession-trades-still-on
http://en.wikipedia.org/wiki/General_Motors
http://biz.yahoo.com/ic/41/41854.html
http://dic.academic.ru/dic.nsf/enwiki/386046
http://en.wikipedia.org/wiki/Volvo
http://thefutureplace.typepad.com/the_future_place/2008/11/volvo-sales-indicate-recession.html
http://www.bloomberg.com/apps/news?pid=newsarchive&sid=a3XuqLiHF7eU
http://www.thisismoney.co.uk/investing-and-markets/article.html?in_article_id=456069