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Does America Even Need Its Own Automakers?
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I doubt that this is a fact. Surely, GM has some assets that it could sell to raise cash (e.g. your #3, GMAC. Opel, Daewoo, other divisions that I never heard of before and know nothing about, perhaps some excess factories, offices, etc.)
(Reuters) "Shares of General Motors Corp plummeted to a 65-year low on Tuesday, extending steep declines on lingering concerns that the automaker's cash holdings might fall below the necessary minimum during the first quarter.....Credit analysts at JPMorgan said GM has several options to improve liquidity, but added that the No. 1 U.S. automaker's short-term survival will require the help of the government, the company's suppliers, or both....GM shares have lost nearly 40 percent since Friday....GM announced additional steps to increase liquidity, but said that even with those moves, liquidity would be at or near the minimum needed to run its business through the rest of 2008 and would fall significantly short of the minimum needed during the first two quarters of next year."
How'd they ever get into such a mess?
2014 Mini Cooper (stick shift of course), 2016 Camry hybrid, 2009 Outback Sport 5-spd (keeping the stick alive)
The banks and financiers being bailed out need to be held to strict accountability too. If more of them fade away, so be it.
Opel, Holden, GMDAT, and its other overseas operations are literally all they have left that is of sufficient value. A good chunk of GM's North American operations and assets are collateral for a line of credit they took out and used up earlier this year, and everything else that could be sold off already has been. Selling off the foreign arms would be akin to selling the walls of your house. Even if GM did put them on the block, no one (except maybe Porsche and Toyota) has enough free cash to buy them without laboriously lining up credit from stingy banks (which GM doesn't have enough time to wait for).
GM is finished.
Maybe Buick has some value left that it could sell to the Chinese since it is doing well over there? They should offer a buy 1 get 2 free offer and give them Hummer and Saab while they're at it
Buick has a name, and that's it. Might bring a billion or so at best, which would keep GM running for a fortnight or two.
William C. Durant
William Crapo Durant?
http://www.cnbc.com/id/27647852
Bankruptcy is NOT a road we want to go down!!!!!
The original idea of the bailout was to give liquidity to banks, which in turn would lend that to car buyers---which IS the problem---people can't get loans to buy cars on credit and they have, being Americans, no savings to speak of.
A collapse of GM would be GRUESOME...nobody's saying it won't (are they?). But you know, Americans have got to learn somehow that certain actions and bad decisions have consequences. Maybe it'll make them smarter next time? We want everything, but we won't sacrifice to get it.
I'll still never forgot when the Sec'y of the Treasury, was asked, last year, what would happen if our overseas debtors called in their loans, and he said (in so many words) "oh, we'll never have to pay it back, don't worry".
Cramer is asking us to decide whether to give the money to the unemployed or to GM? That's a daring question. I wonder how that would do in a national poll?
'11 GMC Sierra 1500; '98 Alfa 156 2.0TS; '08 Maser QP; '67 Coronet R/T; '13 Fiat 500c; '20 S90 T6; '22 MB Sprinter 2500 4x4 diesel; '97 Suzuki R Wagon; '96 Opel Astra; '11 Mini Cooper S
Oh I disagree, it's the only way to ensure that GM will still be around in ten years' time. And if we somehow throw a bunch of money at them now, we only stave off the inevitable: GM going through Chapter 11 reorganization.
It's funny, 3 months ago I thought GM had the strongest plan for making it out of the mess it was in of all the domestics, but I never really appreciated just how close to the edge of the abyss they were all running.
2014 Mini Cooper (stick shift of course), 2016 Camry hybrid, 2009 Outback Sport 5-spd (keeping the stick alive)
Lee Iacocca had a plan and the vehicles ready to build. I don't believe Chrysler was already in debt to their eyeballs as GM is today. The way I understand this bailout, is we are buying these bundled loans. I would assume most have some sort of assets such as homes. Some are still making the payments. Some of the bundles are real shaky and we the tax payers will lose. That is the current condition of GM. You can call it a loan. It will be throwing good money after bad. We may have already bailed out the banks that loaned GM the $68 billion that will probably never be repaid.
The only car that GM keeps parading as their future is the Volt. That is a joke. An eco wienie car that will not sell or make GM any money. It is a very feeble attempt to build the first generation of plug-in hybrids. They still do not have a battery provider. And the liabilities with the technology is not for a company on the brink of bankruptcy. If it was a good idea, Toyota would already be selling them.
The manufactures show that they can't manage money so don't give it to them. Give it to the consumer and then they will buy what they want and only the manufactures that make what the public wants will survive.
Of course that's another sticking point. GM says they simply build what the public wants. Problem is the public is fickle and changes their mind. Toyota builds something that the public needs and eventually many people want what they offer. Toyota passes up opportunites for fads and quick opportunities on car lines that only last two years but they are healthy even in tough times.
GM, Ford and Chrysler need to make their core business a healthy one. I look at American cars a lot like Craftsman tools. They are good, but there is no way I'm buying one until they go on sale, which they ultimately do. It's a cycle they started and now can't afford to live with. Quit making too many cars.
I always thought if you were losing $X per unit you would want to decrease the units rather than over producing.
Also when you make a good car, make it have wider appeal. I love the new Pontiac G8. It's one of the few GM cars with a decent back seat. However I don't want a RWD car. Surely GM has the ability to make this AWD. I would have one today if they offered it.
Pick out two or three good cars and offer flexibility in specing them out. We don't need 4 versions of the GM Acadia.
No, they had to be taught (marketed to) the benefits of the new stuff.
Toyota invented "feel good marketing" (well Volvo really invented it I guess), not GM. GM invented "built tough" and "like a rock" which is okay but what does that mean exactly?
Personally I think if you only *listen* to the public, you are going to get a lot of screwy, conflicting messages. I think politics rather proves that. But if you are the *framer* of the debate, you gain power. Same with marketing I think, cars, fashion, video games, whatever.
I am pretty sure that your understanding is mistaken. To date the only "bail out" money that has been spent has been used to buy preferred stock in several banks. I would assume the government will collect dividends and then some day can sell the shares back to the bank or whoever wants to buy them. The government could very well make a profit, if share prices increase by the time they sell.
This is ridiculous and I completely disagree. First off, why should I pay additional taxes to fund ultra low rate loans for the Big 3? Why should I subsidize loans to the Big 3? I'd rather have the gov't give me an ultra low rate loan on my mortagage. Or better yet, how about you lower my taxes and let me keep this "loan" money going to the Big 3 at 2% loan rates when I could make a better profit and put it to better use in an online savings or money market account earning twice that at 4%.
The other option to make the loans profitable would be to only loan it to the Big 3 if they are willing to pay 10 to 20% in interest so that at least my tax money becomes profitable.
"As you know, we have taken the tough, necessary actions over the last
few years to strengthen our competitive position. With our UAW
partners we have reshaped our business and will have reduced our
structural costs by more than $13 billion by 2010 and have closed the
quality and efficiency gaps with our competitors. We also are
building products that have received great customer acceptance and
acclaim..."
"....And, there's more to come with the Chevy Volt
which will position GM as a global technology leader..."
"Today, I want you to take the time to contact your members of Congress
to ask them to support America's domestic auto industry. Please call
the following number to be connected with your legislators
1-866-927-2233. Directions and key messages are in the attached
document to assist you with the calls. Also attached is a fact sheet
that includes the economic figures cited above. Additionally, you can
visit www.gmfactsandfiction.com to obtain further information on the
auto industry and GM."
Troy Clarke
President
GM North America
--------------------------------------------------------------------------------- - - ----------------
I haven't seen the original letter/mass mailing/ so I can't verify all of this but it is a very sobering thing to read---it's kind of sad, really. I'm glad that some "facts" might be illuminated but I'm not so sure I agree whole heartedly with everything that is said here.
The letter goes on to state how many jobs will be lost, etc. and that they need $25 billion bucks
But when he characterizes "everyone's" view of GM, he certainly doesn't characterize my view of it. And the rest of his blue-collar-poser-taking-a-stab-at-white-collar-exploiters routine is worthless drivel. I do NOT agree that autoworkers are just a bunch of lazy jackasses, to paraphrase his comments early on in the piece. I think this company does build something of worth but it has been driven to the end of its rope by management that could never take a long-term view longer than a single product cycle (if that) and has no idea of how to diversify its product portfolio as insulation against the bad times. So they have taken the easy way out time and time again and the company has become more and more ragged. Companies like this ARE THE VERY REASON BANKRUPTCY LAWS EXIST.
This report being bandied about this week quotes American job losses at 2.5 million if all 3 automakers fail entirely. Obviously, nothing close to that scenario is envisioned here, why would it be?
Micheline Maynard was a guest on the local morning news here this morning, and she quoted the figure of 100,000 job losses both directly and indirectly if GM were to declare bankruptcy. We lost more jobs nationally than that just in the last two weeks. Very manageable, and a first step to rebuilding this company into something with some lasting power through economic upturns and downturns.
Take it to the court, GM! Ford, it seems, will be able to weather the storm. And Chrysler? Now there's a domestic automaker we genuinely don't need in its current form. Sell the parts, Cerberus, and lick your wounds. Someone (or several someones) with some common sense will buy up the parts and operate them much better than you ever would have been able to .
2014 Mini Cooper (stick shift of course), 2016 Camry hybrid, 2009 Outback Sport 5-spd (keeping the stick alive)
Ford and GM are different from Chrysler in the following ways. Both of these companies actually have a much better potential for survival. I would not bail these companies out. Why? Well, it comes down to the fact that the big 3's legacy costs are so ridiculously expensive that GM and Ford can't sell a car on the same even playing field as Toyota or Honda can. If GM and Ford were to file for bankruptcy than all the legacy costs and unions are busted. If you bust the unions, than they are on the same footing as Toyota, Honda, Nissan, Hyundai, Mercedes, and BMW here in the US. GM and Ford will be able to save the roughly $2,000 per car wasted on these legacy costs and put some of that money back into the research and development of their products. It will be only a matter of time before they would be making even better quality cars than they are at present (which by the way very very good overall.)
I fully understand that the Big 3 brought this on themselves. I will admit this point to an extent but you the reader of this have to realize that the unions were in their own way greedy of taking the opportunity put at their feet to an extreme extent. If the unions were smart and looked at the long term viability of their demands they would have (and probably did) realize that the extremely generous benefits couldn't be sustained with the ever increasing world competition within the car market. This motivation to be as much of a parasite on the backs of the Big 3 was especially true after the Arab Oil Embargo of the early 1970's and the price shock of oil prices in the late 70's. Even if the Big 3 automotive boards were incompetent and in their own right willing accomplises the UAW should have realized that things were not sustainable over the decades ahead and the Big 3 would be in peril to the point of killing the UAW itself. I give Walter Reuther and Doug Frasier a whole lot of credit for instituting programs and benefit packages that were great for the unions at first, but now that UAW membership is about 10% of the US workforce, it hasn't been the utopian world both these leaders worked so hard to implement.
If the Big 3 were to get money from Congress they would have to establish policies and provisions politicians in Washington (primarily Democrat) politicians want. One of the biggest parts of a potential bailout that Washington wants to be a part of, is for Washington to control the Big 3's making of small fuel efficent cars. Washington screws everything up. Social security, Fannie and Freddie you name it. Government on all levels tries to legislate everything including the use of oils that contain trans fats. Freedom of choice is being assulted on a daily basis. If I want to buy a Hummer, I can at present but who knows whether I'll be able to 10-20 years from now, and even if I can they will tax that vehicle like crazy thereby legislating behavior. This applies to many different things. A toilet that was the standard 20+ years ago that could flush 3 gallons of water everytime its flushed now can't be purchased as brand new anymore. Now you have to buy a a smaller capacity flushing unit that flushes less water thereby saving water. Why not sell a lower capacity toilet along side the normal capacity unit and let the market decide. It might sound trivial folks, but it demonstrates my point exactly. Let industry come up with solutions to market problems, and changing conditions. That is much better than forcing businesses through government intervention fix the problem(s). If gas goes to $10 a gallon auto companies will build the right cars for the market if they don't they will be out of business. Government shouldn't legislate peoples behavior, government should work on making markets available to businesses and establishing rules and regulations that promote business growth. By taxing a type of car because "its considered a gas guzzler in the eyes of some people" doesn't promote the sale of that vehicle. The people are smarter than the government is aware.
The simple fact is no matter what the Big 3 do, they have lost too many customers, and there are not enough customers in the world to replace all the ones they have burned.
Extinction is inevitable.
The German automobile importers federation VDIK also called for a bonus for households that junked old vehicles, saying it would be an "incitement to trade in old clunkers for new cars that respect the environment."
http://news.yahoo.com/s/afp/20081112/ts_alt_afp/financeeconomygermanyautoaidcomp- anyford_081112153824/print;_ylt=AnfoLVMbsVtFwwCR.PeZ9PfZa7gF
How you would arrange this in the US so that it would encourage purchase cars from Ford or GM, I don't know. In any case, something like this could act as a general economic stimulus and, in the US, could maybe help get rid of some of our fleet of gas guzzling SUVs and trucks (a legacy from the era of cheap gas...oh wait, maybe that's back?)
Turn in a car for a Big 3 one, get a nice tax credit. Works for me - I'd go buy a Pontiac Vibe based on a Toyota Matrix. :shades:
The simple fact is no matter what the Big 3 do, they have lost too many customers, and there are not enough customers in the world to replace all the ones they have burned.
Extinction is inevitable.
The Big 3 might have a reputation that is less than flattering and maybe some of their customer base would love to see them go under. The part you are so willing to ignore is that GM, Ford and Chrysler still have roughly 45% of the car sales in the US (the worlds largets car and truck market at present and has been now for 60,70 years.) even if they were to go bankrupt I fully realize and am perfectly happy with them coming back into the economy much smaller than they are now but at least profitable. They will be smaller regardles what happens in the next 10-20 years or so anyway. Once the Chinese figure out how to build reliable cars and trucks that are dirt cheap which they will figure out at some point even Toyota and Honda will have their hands full. If I were the Big 3 I would seriously consider ditching manufacturing entireley here in the US. The Big 3 should continue building cars and trucks in Mexico, until the UAW gets a strionghold there which is inevitable they will. Once the UAWis strong in Mexico, the bulk of their cars and trucks should be built in China. Once the quality thing is mastered, and it will be mastered at some point in the next 10 or so years the Big 3 will be poised for a come back in the US. The UAW and CAW are no friends of the Big 3, especially these days. I heard today that if you take th average pay and benefits of an assembly line worker in Detroit, they make $72.20 an hour, That is obscene! The Japanese here in the Country make about $48.00 for the same type of job. GM, Ford, and Chrysler can't compete against that. $26.00 less an hour for the sasme type of work, that is crazy.
Dress it up anyway you want to justify money going to the Big 3, it is most certainly a bailout. One thing that makes me upset about the "bailout" is that the bulk of the money would be going to pay for the wages of the UAW and CAW employees because they are the biggest expense the Big 3 have to contend with, to spin it any other way is being disingenious.
Since there are so many people that are so interested in seeing the Big 3 go under, I think The Big 3 should leave this country and move to China. When you see how many jobs are directly and indirectly hurt by no auto industry, I think you might have a change of attitude.
Seems like our congresspeople aren't listening to the public at all - Pelosi has got a special session set for next week to give away umpteen billions of taxpayer dollars to Detroit. I'm going to start hounding their phone switchboard.....
2014 Mini Cooper (stick shift of course), 2016 Camry hybrid, 2009 Outback Sport 5-spd (keeping the stick alive)
Both of them would be eligible for the junkyard bonus :P
I believe they have a number of branded Buick models that are based off of a number of different cars like Daewoo and Holden. I believe the vast majority of Buick offerings are Daewoo in nature however.
I realize GM would lose marketshare here in the US if they were to ditch the US manufacturing arm of GM. That being said, GM in China is growing a lot every single year. Buick is one of the best selling brands in China and has been for the last 5 or so years with no end in sight to Buicks sales. People would absolutely come back to Buick in the US if they were getting an inexpensive well built car that was reliable and got respectable gas mileage regardless of its country of origin. Look at Hyundai, the Hyundai excell (a mitsubishi car from stem to stern) was complete garbage. There were many people who bought them who were extremely disappointed in those cars. Hyundai, tried again with their own models that were better cars, and it wasn't until the early part of this very decade that Hyundais are good respectable cars comparable to the competition. Hyundai's biggest problem has been the exchange rates that have made their cars more expensive here due to the exchange rates. If people perceive value even if there experiences in the past have been bad ones they will eventually come back to that brand. I wouldn't expect everyone to come back initially but within 5-10 years they would have enough of a market to make a profit, this would be especially true for a car company with such little labor costs like China has verus the rest of the world.
Some whine about communism, but forget that the American right worked very hard to open up China...almost seems like it was a longterm strategy to eventually knock us down a few dozen notches in the name of increased centralized control and governance by banks and corporations...
Again, I believe they have lost so many customers that there will never be enough new ones to make up for it. However, it they come back leaner and meaner, I suppose they could perhaps retain a small portion of that 45% market share. They seem to do well in SUV's and trucks, perhaps that is all they can do competently and profitably.
They could leave the car business to others. If the goverment gave me 75 billion dollars, I think I could get a good US car company up and running from scratch, and start delivering a quality automobile for a competitive price.
http://www.philly.com/philly/hp/news_update/20081113_Harley-Davidson_feels_econo- my_s_pinch.html
I might soften a bit and suggest GM go into re-structuring, but not with the current board or CEO in place. I wouldn't vote for that.
As for the doom and gloom about jobs, my take is that yes, a GM re-structure would be rather devastating, but mostly for the Midwest areas where they do most of their building (Michigan and adjoining states). I don't think the rest of the country will suffer anywhere near as much---suppliers will have a few layoffs, re-adjust who they sell to and what they sell, but they can cope with that.
You might also deal UAW cutting a deal whereby GM brings back jobs from Mexico in exchange for being allowed by UAW to hire domestic workers at lower wages and benefits.
As Time magazine recently pointed out, the irony of down-sizing is that in the auto industry, it costs a HUGE amount of money to downsize without bankruptcy. This makes a total restructure possibly more attractive to the corporate bean counters?
Even with a bailout of $50B (this number keeps going up), GM is going to have to re-structure their business. They think they are re-structuring but until they make the painful decision to cut unsustainable divisions like Saturn, they are still at the tip of the iceberg in my mind. Cutting shifts, cutting labor, cutting benefits, etc are reactionary items that any manager can do when sales go into the tank. A visionary realizes that moving forward we can't sustain 7 separate auto divisions when your market share continues to shrink. A smart manager looks at what his successful competitor is doing and adopts it to his/her company. You also announce this plan to everyone who will listen so maybe they will invest in your company.
The dumbest thing Wagoner could have done is announce to the world that GM will run out of money by January. Who wants to invest in this company knowing that it is a better than average chance, it may not be around come 2009? Also he is using fear to pressure the government instead of using the supposed leadership skills he possesses to develop a plan. If I was on the board of directors, Wagoner would be gone!!! GM cannot be successful with him as the leader. If this is his best plan for GM to survive, they need a change of leadership. NOW! Wagoner should be shouting form the rooftops his plan to turn around the company. Going to all his top investors and showing them how GM return to profitability even in a down market. Instead his plan is to instill fear in the American people which is why people are saying "let them fail".
GM needs to sit down with the UAW and have a heart to heart. Open all of their financial books and figure out a way with the UAW to make GM profitable. The UAW will have to make concessions but in return maybe Gm can offer employee ownership for the UAW (stock options) so the workers are invested in the company. GM succeeds, the worker succeeds. Also maybe for lower wages, they move the plants from Mexico back to the US so they can hire back some workers. Work with the dealerships to reduce the number of franchises based on fewer car divisions. How about selling the remaining 49% of GMAC to Cerebus and negotiate loosening the credit lines so more people qualify for loans.
I think Ford is already on the right path and has taken drastic steps to return to profitability. They can make it and they do have the products in place. They just need the original $25B (I have no problem with this money since it is related to upgrading plants for fuel efficient cars) and maybe a safety net just in case things don't work out (car sales go lower next year). Offer Ford a line of credit.
Chrysler/Cerebus: No money. Cerebus wants out of the auto industry. Let them sell Chrysler or individual divisions. They have no commitment to the workers, so no money. Plus they have money to invest and/or the ability to obtain it, they don't want to.
My feeling is that the Big Three are absolutely certain that they will be bailed. Arms are not being twisted in DC now, they are being broken. :P
Even if he hadn't said anything, the information would have been contained in the various reports that GM is required to file. Eventually people who study the industry would have pieced it together, and figured out just how much money GM has left.
I may have owned my last GM car, whether they make it or not.....
I'm not sure about Wagoner and am certainly not thrilled with Nardelli, but Mulahy at Ford continues to impress.
"The supply industry, which is made up of roughly 6,000 firms in North America, two-thirds of them in the United States, "is an integrated system," said Sean McAlinden, vice president of research at the Center for Automotive Research in Ann Arbor. "It's a house of cards. You knock down enough of the cards in the bottom rows and it all goes down for months," he said. "It's going to cost Toyota and Honda a great deal if this happens," McAlinden said. "They're incredibly worried.""
The domino effect of a failing domestic auto industry