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Friday, 12 December 2008

Vauxhall going into administration?

Vauxhall going into administration may not be as shocking as many people think!

Why? Well let's look at look at two key issues for General Motors UK Ltd (the actual trading company in the UK):

Number 1: look at its balance sheet: at 31st March 2007 it had an insolvent balance sheet to the tune of (£396m) yes negative to £396m. What does that balance sheet look like if the supporting parent goes into Chapter 11 in the US? INSOLVENT.

Number 2: look at its credit rating - ZERO. So its highly likely that suppliers to General Motors UK Ltd cannot get any credit insurance or indeed factoring /discounting of their debts. So as the board of those suppliers do you look at the news, consider the issues and STOP supplying GMUK? Or do you keep supplying?

Incredibly complex decisions need to be made by hundreds of suppliers to Vauxhall and other car companies over the next few weeks.

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