WASHINGTON AND LOS ANGELES — Less than six weeks after filing for protection from its creditors, General Motors Corp. is expected to emerge from bankruptcy today as a leaner, greener company but saddled with doubts as to whether it can turn a profit for its new owners, the American public.
Amid speculation that GM will change the blue in its classic logo to green to highlight its environmentally friendly rebirth, the company will have a tough time turning its bottom line from red to black, analysts said. Vehicle sales have plummeted worldwide because of the global recession. And GM's image, already battered after decades of declining quality, has been further damaged by its plea with the government for billions in taxpayer money to keep it from the corporate scrap heap.
"It's impressive that they got through bankruptcy that quickly," said Karl Brauer, editor of auto website Edmunds.com. "But . . . when it takes you three or four decades to tear down a car company's image, it takes more than 39 days to bring it back."
Wooing back U.S. auto buyers is the largest challenge facing GM, analysts said.
Consumer researcher J.D. Power & Associates reported last month that the quality gap between U.S. automakers and their foreign rivals is as small as it's ever been.
"The problem is that the American public isn't ready to believe that, and that's the most important issue that GM faces," said John Wolkonowicz, an analyst at IHS Global Insight. "How do you bring consumer perception in line with the reality of what a GM product is today?"
In the 1950s and '60s, about half the cars sold in the United States carried a GM nameplate. The company's dominance waned as consumers migrated to foreign makes. Through the first six months of this year, GM's U.S. market share shrank to less than 20%. The world's largest company as recently as a decade ago, GM will emerge from bankruptcy smaller in every way.
The restructuring will allow the automaker to dump most of its onerous debt load -- it entered Chapter 11 with $176 billion in liabilities and will exit with just over $48 billion in debt.
But GM also is cutting 21,000 salaried and hourly jobs by the end of next year. It will close 13 plants and is pulling out of its joint venture with Toyota Motor Corp. in Fremont, California's last auto factory. GM has struck deals to sell three of its brands -- Hummer, Saturn and Saab -- and has pulled the plug on Pontiac. And the company is severing ties with 2,400 of its 6,000 dealers.
