Birmingham experts say GM faces uphill battle - Birmingham Business Journal:

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Andreas Rauterkus, assistant professor of finance atthe , suggestedx that because of the magnitude of the GM there is no precedent for how the finap chapter of the filing will end. “I cannot remembef a large auto bankruptcy that went smoothly with the compan coming out stronger or even able to Rauterkus said in statementreleased today. “Still, we have never seen this levek of government intervention in a bankruptcy proceedingg with the federal government essentially takintg over the business for a perioxdof time. That influence could be the differencse because government cash could help a reorganize d GM move quicklytowards profitability.
” In Rauterkus said in the short term, GM will continue to struggle to compete with its foreignh counterparts. “The foreign auto makerzs with plants in Alabamz and many other states were clearly already building the kindsa of carsAmericans want, which is something GM has not been Rauterkus said. “So those foreignh brands were well-positioned and should continued to excel whileGM reorganizes.” But, according to Rauterkus, if the restructurinhg is successful, it could presentr GM with numerous opportunities.
“In the much longer and if GM is able to survive with its bestbrandxs intact, there is the chancw for the company to challenge othedr automakers,” Rauterkus said. “Because with a narrower branf focus and cash freed up through the resolutionb of itscrushing debt, GM may be able to invesy in new concepts, ideaw and designs that American driversa will want, which is somethingt the company hasn’t really done for decadezs because of its financial hardships.” Thomas L. Powers, professor of marketing at UAB, added that the key to becominfg profitable again will depenr on how much the companty can restructureduring bankruptcy.
“The idea that simpluy dropping some brands will lead to profitabilityu is not necessarily correc t because the brands you keep would still be operatinv under the old GMbusiness model, whicbh was not successful,” Powers said. “You need to fundamentallg restructure thebusiness model, including majod improvements to the product lines, if you are going to achieved success at GM.” Powers notecd that the brands that aren’t being dropped still have an uphill battle.
“The idea to spin off GM’d best brands into a new GM is not necessarilya cure-allo because even the company’s best-selling brandsa are selling fewer cars compared to thei foreign competition,” Powers said.