Weeks after America's huge investment banks' meltdown, let's do a little reality check on how our demi gods giant carmakers are doing. In the most recent news, the world stock market continues to plunge down despite the American and European government bail-out plans. Apparently, these actions have not dissipated investors' fear and loss of confidence on the global stock market. The London Stock Exchange's overall share index went down by 7.85% difference while France's Cac-40 lost 9.04%. In other words, they are losing big time.
On September 30th, General Motor announced a new strategy to help ease this financial burden on themselves. It's the old, worn out road that they're taking for a strategy and that is: buy less; sell more. In simpler terms, they want to save more by cutting down on stocks that they buy and they do this by suspending the stocks that their employees buy. This policy applies to GM directors and executives as well. This is because of the common supply and demand mechanism where as prices for GM stocks drop, the participants such as the members of the company buy them. In other words, the employees have already bought the rest of the available GM shares; so now what's left for the company to sell to other investors at a higher price, right? By September 30th, the GM stocks have already gone down 78%.
Last week, Detriot, Michigan (where General Motors is based) had its $25 Billion loan approved by Washington. Now European carmakers also want billions of loans too. Fiat is now thinking of going to the European Commission to ask for a 40 Billion Euro (that's about $55.2 Billion) loan for the euro carmakers.