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UK newspaper says GM bankruptcy resulting from inefficiency, high costs
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21:52, June 02, 2009

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The failure of General Motors (GM), the biggest carmaker in the United States, resulted mainly from inefficiency and high costs of its products and the U.S. economic crisis has merely hastened GM's bankruptcy, the Times said on Tuesday.

GM, one of the once dominant "Big Three" American automaker, on Monday filed for a Chapter 11 bankruptcy in the largest such case in U.S. industrial history.

The Times said in a leading article that the root problem, which GM shares with Chrysler and Ford, is that American cars cost too much and are not good enough. There was insufficient demand for GM's cars even if credit were plentiful years ago.

American manufacturers' costs are far higher than those of other car producers operating in the United States such as Toyota and Nissan and the main reason is benefit costs, principally healthcare and pension contributions for current and retired workers, it said.

Lack of timely shift of production is another problem of GM's failure. U.S. car producers persisted with large sports utility vehicles (SUVs) a few years ago while Asian manufacturers had long anticipated the growth in demand for smaller vehicles that are more efficient in their consumption of energy.

GM's failure is a cautionary tale of what happens when a company ignores market disciplines and fails to control costs, the article said.

Source: Xinhua



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