Introduction

The General Motors (GM) is a United State automaker that was been founded by William C. Durant in Michigan, Flint, which is currently based in Michigan, Detroit, and it is also the second largest automaker in the world’s, as it was been ranked by the global unit sales for the last year (2008).

Nonetheless, the General Motor automaker have beforehand led in global sales for seventy seven uninterrupted years, (that is from 1931 to 2007) which is been considered as the longest compared to other automaker. However, its undertaking is to manufacture trucks and cars in thirty four countries. The General Motors has employed more than two hundred and forty four thousand five hundred employees around the global, and serviced and sold vehicles in about one hundred and forty countries. (Beaver, K. M. 2008).

However, on July 10, 2009 the company gets itself into hot water due to bankruptcy. It is totally ironic for the company that seems to progress successfully but it turn out to be in a big trouble. The upcoming 2011 Chevy Volt has actually engendered with more excitement for the General Motors Company than any other manufactured goods in up to date memory. When comes to the cost side, the market has drastically slowdown and caused factories to be closed down, which has confiscated mainly if not all the industry’s overfilling of trucks and cars (Eadie, T. & Morley, R. 2006). On the other hand, when the new labor will embarked on, GM’s cost of producing the cars will reduce to a point whereby it can now be a profitable business. That will be good news but the big question is, will the General Motor Company be around so that it can benefit once the economy recuperates? The troubles at the General Motors Company are complex and vast. (Farrington, D.P. 2004), the below table shows the number of the most popular vehicles in the U.S sales

Causes of the Crisis

1. 1.    Demand shift and uncertain energy policy

According to Paul W. MacAvoy, Ira M & Millstein (2004)), the first cause was the rise of energy price in the past summer. This resulted to a rapid mix shift in automobiles and it also has a major impact on turnover or profitability. The General Motors, Chrysler and Ford have most likely relied on trucks and SUVs for most of their profits. For those vehicles that were been commanded with higher sticker prices and which lifted the market up to fifty percent of the United State of America car market in the late nineties, their demand falls rapidly as the customers went for the smaller vehicles that are less expensive and less lucrative cars. This forced the auto companies to have two major issues which were critical and they necessitated to be addressed; a backlog of unnecessary trucks and a loss of revenue. Also, according to the research that has been made by the researches, it clearly shows that the biggest factor was the lack of energy policy in U.S. Following is a graph showing the fuel price.

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