Post-Bankruptcy GM Will be Smaller: And Its Cars Will be, Too

General Motors declared bankruptcy today, the largest manufacturer to ever do so. Despite nearly $20 billion in U.S. Treasury loans, GM went out with $82 billion in assets and $172 billion in debts.

The U.S. will now own 60 percent of General Motors, but the period of federal control could be relatively short. Stripped to just Chevrolet, Cadillac, Buick and GMC trucks, the much smaller GM plans to re-launch in two to three months. Gone will be Pontiac, Saturn and Hummer, though how the latter will be jettisoned is anybody's guess.

The new GM will no longer have a European unit. Opel is scheduled to be sold off the Canada's Magna International (which is also a major supplier for Ford's forthcoming electric car project). Saab is also reorganizing, and will cut ties with GM as of January 1 next year. It reportedly has three current suitors (down from 20), including a Chinese carmaker.

One thing GM is not cutting is its forthcoming small car lineup. The company is not only getting smaller, so is its product line, which will be leaner in every sense of the word. According to powertrain spokesman Rob Peterson, "Today's announcement has no impact on the Chevrolet Volt or any of our small car plans."

GM said May 29 that one of its shuttered (and unionized) plants will be dedicated to making small cars, but Peterson said no details are yet available. GM is cutting its plants from 47 to 34 by the end of 2010 and to 33 by 2012. Five powertrain plants are closing, as are three stamping plants and three service and parts operations. Factories in Pontiac, Michigan and Wilmington, Delaware are on the chopping block, and the Saturn operation in Spring Hill, Tennessee will go to standby capacity.

The venerable Detroit-Hamtramck plant will build the Chevrolet Volt--the cornerstone of GM's recovery plan--so that one is safe for a while.

In making the plant-closing announcement, GM said, "This new small car will play a vital role in GM's plans to improve the fuel efficiency of its vehicle fleet. Small cars represent one of the fastest-growing segments in both the U.S. and around the world. The retooled assembly plant will be capable of building 160,000 cars annually."

The new global 2011 Chevrolet Cruze (replacing the Cobalt) will be in production early next year, to be built at the Lordstown plant in Ohio (and at other locations worldwide). The Chevrolet Spark mini-car and Orlando seven-passenger vehicle will also come to the U.S. in 2011. "The Spark will definitely be built," said Peterson, "but we don't know where yet."