Ponying up more than $100,000 of their own money, three dozen General Motors Corp. dealers nationwide this month bought full-page newspaper ads imploring the public to give GM a chance.
"For the good of everyone, they must succeed and they need our help," the ad read. "We pledge ours. We hope you will do the same."
For most of GM's 98-year history, that kind of plea would have been unimaginable. But now, the company long synonymous with U.S. industrial might is scrambling to avoid something else once unimaginable: bankruptcy.
GM executives, including Chief Executive Rick Wagoner, say they have no intention of filing for bankruptcy protection, and no need to do so.
On Thursday, the company reported a $323 million first quarter loss, a sharp improvement from recent quarters and an "important milestone" in the automaker's turnaround plan, Wagoner said.
But some veteran industry analysts say GM's fundamental problems of high labor costs and falling market share are so severe that there is a serious risk that the auto giant will enter Bankruptcy Court in the next few years. Any number of events could be the tipping point -- another surge in oil and gasoline prices, a recession brought on by rising interest rates or a strike by GM's main parts supplier, which already is operating under Chapter 11 of the U.S. Bankruptcy Code.
For the world's largest automaker and its vast constituencies, the prospect of a bankruptcy filing is so daunting that even many of Wagoner's critics hope his revival program works.
A GM bankruptcy filing would be the largest in history, challenging Wall Street, organized labor, politicians and the legal system to deal with the fallout.
GM's 147,000 workers in the U.S. and 460,000 retirees would face the prospect of their pension plans' being dumped on the federal government and of seeing their future benefits reduced.
Stock and bond markets could be upended, at least temporarily. GM shareholders, including billionaire Kirk Kerkorian, who owns 9.9% of GM, could lose every penny of their investments in the carmaker. Meanwhile, the company's bondholders, banks and other creditors would face unknown losses on $33 billion of debt.
Almost certainly, a GM bankruptcy filing would have enormous repercussions for the entire U.S. auto industry, which still directly employs about 1 million Americans, many of them in the Midwest.
Several big auto parts suppliers already are in financial reorganization. If GM joined them, it would raise the possibility of a domino effect of additional failures throughout the industry -- including Ford Motor Co., some analysts say.
Although the public has witnessed some colossal corporate busts in recent years, "I would not underestimate the effect on the American psyche" of GM in Chapter 11, said Steven Roach, an economist at brokerage Morgan Stanley in New York.
The shock effects would ripple through the economy, from assembly lines to auto insurance offices, from Midwest shopping malls to global financial capitals.
For GM's 7,300 U.S. dealers, an immediate worry would be that sales might halt.
GM in bankruptcy would be "really uncharted territory," said Leonard Renick, owner of Renick Cadillac in Fullerton.
In terms of his ability to keep customers coming through the door, "It couldn't be good," Renick said. "I think it would be pretty devastating."
For all of its problems, GM still accounts for about 1 of every 4 passenger vehicles sold in the U.S. Its worldwide sales were $193 billion in 2005, ranking third on the Fortune 500 list.
But GM lost $10.6 billion last year, and Asian rivals have been taking market share from the company for decades.
Since last fall, GM has been trying to shrink its way back to health by closing a dozen plants and offering cash buyouts and retirement incentives to all 113,000 of its U.S. hourly workers, hoping to get a large number of them off the payroll. The company also has struck a deal with the United Auto Workers to trim retiree healthcare costs. Even so, by some estimates GM is draining $13 million a day.
"The current path is simply unsustainable," said Sean Egan, managing director of credit-rating firm Egan-Jones Ratings Co. in Haverford, Pa. He predicts GM will be in Bankruptcy Court within two years.
Chapter 11 is designed to give a troubled company breathing room while it restructures. Debts are instantly suspended, and the company operates under court oversight and protection while it tries to work out its problems.
In that sense, a filing by GM might seem a logical step for a business that is battling to reinvent itself. Major airlines and telecommunication firms have sought bankruptcy protection in recent years, and their customers have stuck with them.
But apart from a home, a car is the most expensive item most consumers buy. They expect big-ticket goods to last for years and for the manufacturer to be around to service them. In bankruptcy protection, GM would have to convince consumers that it wasn't going away.
