General Motors Corporation (GM) is one of the largest automobile manufacturers in the world. We believe that the company should file for bankruptcy to rid itself of Unions and pension & health care issues, besides separating dealerships from the rest of the company.

The company has failed to secure any loan from the government until now. The U.S. government was supposed to provide $25-50B in aid as DIP [debtor-in-possession] financing. The government also rejected the immediate $12 billion short term loan as the UAW [United Auto Workers] refused to accept any wage cut until 2011.

General Motors is looking at money under the Troubled Asset Relief Program (TARP). However, this is still under review. Any aid should force the company to only make 35MPG+ vehicles. Management should be purged and outsiders brought in. Tariffs and quotas should be implemented for imported vehicles from overseas. Consumers should be allowed to deduct their automotive interest.

Lastly, global alliances should be forged among producers in North America, Europe and Asia. From an equity holder perspective, we rate the shares a Sell with a six-month target price of $0.00.

Read the full analyst report on GM

“GM” Free Stock Analysis: Buy? Sell? Hold?
Zacks Investment Research

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