Can "Government Motors" succeed where GM failed?

By David Bailey and Soyoung Kim -Analysis

DETROIT (Reuters) - General Motors Corp has tens of billions of dollars in government backing, a grudging labor peace and the support of its big bondholders as it gets ready for what is intended to be a swift dash through one of the biggest bankruptcy cases in U.S. history.

What could possibly go wrong?

Possible scenarios range from bad to catastrophic. Analysts say GM sales could sputter, its bankruptcy proceedings could get bogged down, the cost of its bailout could mount and government intervention may fail to solve the company's core problem -- making and marketing better cars.

Skeptics have already dubbed the automaker "Government Motors," on the verge of being effectively nationalized with a $60-billion investment by the Obama administration.

The bankruptcy will put GM on track to slash debt and labor costs. It will drop the Hummer, Saab and Saturn brands and eliminate 40 percent of its U.S. dealerships, leaving a leaner company with a sharply lower cost-base.

But those achievements will stop short of a complete reinvention of the 100-year-old automaker.

"If they even come back with a clean balance sheet, they still have to put out quality cars," said Bernie McGinn, president of McGinn Investment Management and a Ford Motor Co shareholder.

Just as there is no quick fix for GM's lineup, even a short stay in bankruptcy will see the automaker emerging into an 18-month-old U.S. recession that has ravaged the industry.