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Ford made smart moves by changing the CEO and borrowing money when the market was still lending money. Ford can ride this out longer than GM without government money.
If GM fails then the weakest company goes under and Ford is rewarded for being less weak. Ford gains much market share from GM's failure. Ford is much less bloated and is more competitive than GM. GM's failure would help Ford a great deal.
By the government bailing GM, Ford's weaker competitor is "propped up" and Ford has to continue to compete in a Detroit 3 market with too much oversupply of product. Both companies remain weaker. More failures in the future are still likely.
Markets are machines. They work in a certain way whether we tamper with them or not. The weakest will eventually fail and the strongest will survive, regardless of any bailout. The bailout just wastes taxpayer dollars and delays the inevitable. Without massive structural change, one or all of the Detroit 3 are doomed, regardless of any bailout money.
Without massive structural change, one or all of the Detroit 3 are doomed, regardless of any bailout money.
Regards,
OW
This car will go 80 mph and has a range of 200 miles. Recharge is said to take about 6 or 7 hours on a 120-volt outlet. This car is to be built in Turin, Italy. And they are going great guns to get this thing out next year. Importing to the U.S. remains a cloudy prospect but may eventually happen. It would take me away from being a potential GM customer unless GM drops Volt pricing to at least as low as $30,000. That's before the $7,500 rebate and the Chevy $2,000 manufacturer rebate.
Lower it, Chevy! :shades:
2021 Kia Soul LX 6-speed stick
For all of this delay and denial (and not just about fuel economy but quality also), the Detroit 3 deserve a no-strings handout in 2008? Not if I had anything to say about it. "Some day" has arrived.
Yet, there was sort of backlash from that downsizing. There were still plenty of people that wanted a massive full-sized car. And with GM out of that running, the big Ford and Mopar cars actually saw a bit of resurgence.
When the recession hit in the early 80's and the US auto industry reeled from the impact, oddly enough, Olds, Buick, and Cadillac stayed fairly strong, based mainly on the popularity of their larger models. By the spring of 1982, with the economy as bleak as it was, V-8 Caprices were going out the door for sticker price, while GM had to slap rebates on the more economical Cavaliers and Celebrities.
When GM started their second wave of downsizing in the spring of 1984, it came at an incredibly poor time. And with most of the big cars eliminated, it was only a matter of time before people discovered pickup trucks and full-sized Blazers and Broncos.
I'll agree completely that none of the automakers deserves a no-strings handout. They need to at least have a viable business plan, and not be permitted to just blow through the money as they see fit.. At least that's something Chrysler had in 1978, when the gov't guaranteed their loans...they had plans to come out with a whole new line of cars that, on paper at least, looked promising. And Chrysler also had to give in to some demands, such as eliminating their big-block 400 and 440 V-8's.
When GM radically downsized its C and B bodies in 1985-6, they almost lost me forever. Thank God, they held onto the big B-body Caprice and the Cadillac Brougham which henceforth was refered to as a D-body. Ironically, I ended up with a downsized FWD C-body many years later.
Toyota makes big trucks and SUVs, too. It just rolled out an all-new, bigger Tundra, and a revamped Sequoia. But it also kept the Corolla and Camry current. Those models weren't treated like the red-headed stepchildren.
Ford, at least, appears to have figured this out - it is rushing the new Fiesta and Focus into production, revamping the Fusion and Mustang for 2010 and has a restyled Taurus waiting in the wings. But it is also keeping the F-150 up-to-date. Regardless of gas prices, a buyer should find something attractive in Ford showrooms, once it gets the new passenger cars into production. Provided, of course, that Ford lasts that long...
Yes GM has lost market share slowly over the years but there are also many many more competitors on the market now and a lot of that lately has been because the truck market disappeared, their newer cars have been selling fairly well.
Yes lots of excuses but much of the lack of competitiveness is because of the unions and the legacy costs which strain profits. It's kind of hard when $2000 of every car goes to pay for health and benefits. When car sales fall the way they are, there is no way they can cover those costs.
"Japanese automakers Toyota Motor Corp. and Honda MotorCo. say they are "very concerned" about the potential failure of Detroit's three car companies as analysts warn a bankruptcy would throw the entire auto supply base into chaos and rattle the operations of even the most profitable manufacturers".
http://www.nationalpost.com/story.html?id=954380
So yes you are right that they lost market share because of increased competition but it's because they abandoned the US market and sent their better cars overseas. Also the continued use of rebates de-valued their cars. When it started back in 2001, it was a way of keeping the economy going after 9/11. But now people come to expect the rebates and won't dare pay full price for a GM product. I mention this because I bet without these incentives and with competitve cars over the years, GM could have overcome that $2000 legacy cost per car. Plus those costs are part of doing business (i.e. overhead).
GM made poor business decisions over the years and it is costing them.
Yes, toyota is getting killed in the pickup market but they also make money on the Camry and Corolla. Plus they are projected to make a profit this year of over $5B. Plus they are sitting on a bunch of cash.
The supplier is a repercussion of the " They made their bed ". argument. Poor decisions have been made by the three but they have also been greatly abused by being locked into labor / health cost by the UAW. Given, that the current administration is pro union. Given, with the bail out they'll survive or some of them at least but even if they achieve future best selling brands, they'll have to work twice as hard to remain competetive. Given all that, I favor the bailout as it seems rather discriminatory to favor banks over financing divisions. But make it a loan, let's lose the bail out stigma and give enough money to survive '09 and possibly half of '10. If all three survive fine, if two or only the last man standing, Then he/they are responsible for P&I of the total package. The impact of large unemployment at this juncture is deeply worrisome. More so that US suppliers of car parts are driven out of business and we become dependent on the Chinese for aftermarket. I can almost see it,80,000 car crashes linked to use of cardboard instead of brake pads in Chinese brakes. Chinese response : well they were $11.00 cheaper per pad.
Fom van's posted article:
"We expect a major wave in supplier bankruptcies or a 'supplier shock,' " the analysis said.
North America's roughly 6,000 auto suppliers are already under severe pressure from a collapse in U. S. sales of cars and trucks to 25-year lows, which has forced the Detroit automakers to cut output in the face of lower demand. Ford MotorCo. said yesterday it will temporarily shut down nine of its plants continent-wide this quarter as it builds 211,000 fewer vehicles than a year earlier, including Ontario assembly factories in Oakville and St. Thomas.
"We're very concerned" about maintaining the stability of the supply base, said Edward Miller, spokesman for American Honda Motor Co. "Obviously this is very disruptive."
Closures and Layoffs 11/9 - 11/15
It's all relative in the cycle. Finally, it's the end of the line for the auto firms as we knew them. I'll bet time runs out before the cash is available even if passed by congress.
Regards,
OW
I don't think most people really understand what is really at stake. I just don't think they get it. It's not pretty, but something must be done.
I think you are WAY over stating the job losses. I don't believe for a minute that 2.5 or 3 million jobs will be lost. Ford, Chrysler and Toyota have factories working at far less than capacity. The demand will be nearly as much as before GM dies or files for bankruptcy. If they file for bankruptcy there will be very few jobs lost. Maybe some unhappy workers. They will take what they are offered or some of those 12 million illegals that Obama is ready to give voting rights to will snap up those jobs.
We will be in this subprime lending recession for a while until all those that cannot afford what they bought are foreclosed on. Then the economy which is strong will turn around. CA has nearly as high of Unemployment as Michigan. The stores are packed even during light shopping times.
Canada may get hit worse. You have a lot riding on the oil that has lost a big share of its value. That hit your currency as well. I don't know about your auto manufacturing. I do know that the Ottawa plants were always rated high. So they may get snatched up by other automakers.
Just a blip in the history book. Not even close to our recession in the late 1970s.
Of course, even if they are propped up by big $$$ from you and me, here's what's going to happen:
1. They massively restructure, resulting in a combination of lots of lost jobs and/or major salary and benefits cuts; or
2. They don't make major changes, they suck up the money and "wait it out", and then in another 1-2 years they are risking failure again. So either they fail and we lose all those jobs, or we bail them out again. Repeat the bailouts from you and me indefinitely until/unless they fail or they massively restructure, resulting in lots of lost jobs.
What this means to all of us: We are going to pay no matter what happens. If GM survives we foot the big a** bill. If GM fails the economy tanks even more and we suffer for that. And no matter what, if you are a GM employee, brush up fast on your skills and let's hope you saved your money.
You may very well be correct. However all of these estimates assume that the company and all the employees belly up. The fact remains that the car demand in the US is going to be whatever it will be, and if GM fails then buyers will go to other makes. That means the survivors (Ford, maybe Chrysler, and the other foreign transplants who make cars here) will see a significant increase in sales. So saying "over a million jobs will be lost" or some such is simplistic; jobs will be shifted but nowhere near that many jobs will be lost on a permanent basis.
Isn't capitalism fun, where the strong survive and the weak fail? The alternative would be how Eastern Europe looked in 1985. Pick your poison.
There are alot of rich people in Moscow(russia), maybe they can help.
Think I will take a visit to St. Louis to see the show, I need to get out for a spell.
First the collective needed, and got, $25B to retool to make fuel-efficient cars
Then GM wanted $10B to buy Chrysler
Then another $25B because all of a sudden GM's going to run out of cash sometime between today and second quarter 2009, and Ford & Chrsyler could use a little help too
Next they needed an additional $25B to fund the pensions, retiree health care, and the like (and I'm pretty sure somewhere in there, there has to be a mention of giving raises & bonuses, i.e. incentives, to retain the brain-trust, the talent - the same "brains" that got them into this mess)
And as stated by another poster, they act as though GM going into BK is the as them closing up shop - that is simply not the case. It would actually help because then they could re-configure from the top down & bottom up. Just giving them billions upon billions and letting the same mess go on is not going to solve the problem. Some say people won't buy a product from a company that is in BK; hell, people aren't buying GMs now!!
This is what I'm afraid of, as that is really the only thing you keep hearing. 2010, 2010, what until 2010... What if 2010 is a flop with recession, economy has not turned around, still have high unemployment, then what?
NBC is pulling the plug on "My Own Worst Enemy"
Exactly!!
Remember first encounter with a Japanese car in 1984. Was looking for a small 4-cylinder car that would be economical and fun to drive with good handling. Had a VW Scirroco 4-cyl that I wanted to replace, so was familiar with sporty drive/handling. VW was fine for reliability, handling, engine, etc., except it had a terrible problem with rust.
Being a former GM guy, I naturally went to some GM dealers first to try their offerings. In test drives, cars were numb, just appliances. Everything about the GMs was uninspiring.
Then test drove Toyota, Datsun/Nissan, then finally Honda. It then became obvious to me that Japan had passed Detroit in ability to build cars that had better quality (fit/finish, interior, paint, brakes, transmission, engine, etc) than Detroit.
Ended up with a Honda Prelude, had to wait 4 months to get, and drove for 195K miles. Had no problem with rust on Honda. I still remember discovering the fine handling (compared to the GMs) on the first test drive. Toyota and Nissan were not quite as good as the Prelude, but still significantly better than the GMs.
What is important to recount about Japan, and Honda in particular, is how quickly they were able to improve their product. I recall that the first years of Hondas imported to the U.S. were very inferior in many regards to U.S. brand. But, they obviously were committed to "continuous improvement" in all aspects of their business unlike the U.S. brands. They are relentless in their efforts.
Recall reading car magazine writers such as Brock Yates (Car and Driver) in early 80's commenting on how the Japanese overtook U.S. brands in quality, reliability, handling, fit/finish, etc.
Agree.
UAW workers can only put together the products that Management has authorized the engineers to design. Management/leadership is ultimately responsible for the direction, success/failure of a company. Management gave in to unreasonable union demands for many decades. The chiiiiiickeeeeens have come home to roost, if I can quote an infamous guy.
buyers like Lemko, who prefer the big cushy sedan are a dying breed - have been since the Accord and Camry caught on.
I only see GM surviving after filing BK and breaking all their current contract agreements. They've come along way in building some decent cars to compete with Japan with the exception of a worthy hybrid. Declare BK, fashion your pay and compensation grade to match the Japanese (US workers), build a decent hybrid...oh and see if the Fed will give you $25Billion.
I'm guessing, GM will get the $25B, piss it away, tell us the volt is almost here and ask for more of my tax $$.
Midsize cars have grown in size and capability to the point where they are viable alternatives to the traditional large sedan. And even "small" cars have grown up.
I'm looking at the lastest issue of Ward's (Nov. 10), and I see that over the first 10 months of the year, the 15 top-selling cars (excluding pickups, SUVs, and vans) are all midsize or small cars, with the arguable exception of the Chevy Impala. The top four, in order, are Camry, Accord, Corolla/Matrix, and Civic, all with sales above 300K units and the Camry at nearly 400K units. Oh, and only 6 of the 15 are domestic models.
On the truck side, the F-Series still leads, at 436K units (well below levels of just a few years ago), the Silverado is 2nd at 402K units, the Ram is 3rd at 214K units (it used to sell well ahead of the Camry), and the CR-V is 4th at 171K units. In this group, 9 of the 15 are domestic models.
I think the days of the large pickup as a "showoff" vehicle are done; their sales will revert to those people who really need them for work or towing duty.
http://www.autonews.com/article/20081114/ANA02/811149966/1126/emailblast02&refse- ct=emailblast02
If Congress thinks a bailout of General Motors is expensive, it should consider the cost of a GM failure.
Let's be clear. The alternative to government cash for GM is not a dreamy Chapter 11 filing, a reorganization that puts dealers and the UAW in their place, ensuring future success.
No, even if GM could get debtor-in-possession financing to keep the lights on (which it can't), Chapter 11 means a collapse of sales and a spiral into a Chapter 7 liquidation.
GM's 100,000 American jobs will die. Health care for a million Americans will be lost or at risk. Hundreds of GM's 1,300 suppliers will die. Their collapse could take down Ford Motor Co. and Chrysler LLC, perhaps even North American transplants. Dealers in every county of America will close.
The government will face greater unemployment, more Americans without health insurance and greater pension liabilities.
Criticize Detroit 3 executives all you want. But the issue today is not whether GM should have closed Buick years ago, been tougher with the UAW or supported higher fuel economy standards.
In the next two to four months, GM will run out of cash and turn out the lights. Only government money can prevent that. Every other alternative is fantasy.
The taxpayer needs protection and an upside. GM's top management may need to go. Government-as-shareholder deserves a big voice. Those details can be worked out.
The Detroit 3 CEOs and UAW President Ron Gettelfinger had better tell two critical congressional hearings next week what sacrifices they are prepared to make.
But the stark fact remains: Absent a bailout, GM dies, and with it much of manufacturing in America. Congress needs to do the right thing -- now.
My first reaction is that it is a bunch of strongly worded tripe. But I do think that Keith Crain is worth at least a listen usually, so I don't want to entirely dismiss what he is saying here.
I think there are no good alternatives here. It is just possible that bailing GM out repeatedly over the next decade may be a better alternative than just letting it go bust in January (if GM execs aren't lying about that), but no-one should be under any illusion that bailing out GM will start and end with the first giganta-payment we make to them.
I was interested to note this in the same editorial:
Each of the Detroit 3 is in crisis. But Ford, which borrowed big two years ago and thus has more cash today, may skip a bailout and the strings attached. Cerberus, which bought Chrysler last year, doesn't deserve money. Government cash might help sell Chrysler to a strategic owner.
So Crain thinks only GM both actually needs a bailout right now AND is big enough for a bailout to be the better of two bad options for America.
2014 Mini Cooper (stick shift of course), 2016 Camry hybrid, 2009 Outback Sport 5-spd (keeping the stick alive)
The bigger question: Is this a solution to GM's malaise? Perhaps, but forget about it ever becoming a reality. When all is said and done, the company's huge dealer body and the UAW control General Motors. They'll continue to run the company into the ground by valuing short-term security over long-term health. A damn shame, isn't it?"
l2/4/98 Edmunds Editorial
Thie above Auto News editorial reasoning is similar to the reasoning used to justify the Vietnam War. For those of you too young to remember, the justification was based on the "domino" theory. If Vietnam fell to the communists, then communism would spread through out south east asia and eventually everywhere. The answer is - let them liquidate!
here's an article from my local paper this morning discussing a local Lincoln-Mercury dealership that is merging with another unnamed dealership (still negotiating) to consolidate dealers. From the article, Ford assisted in this process. I guess all the manufacturers are "encouraging" dealerships to do this where appropriate. The manager goes on to say he anticipates GM cutting brands sooner or later.
http://ydr.inyork.com/ci_10980105?source=most_viewed
Opel Article
I found this excerpt kind of, I don't know (can't think of the right word / phrase):
"Demant and employee council chief Klaus Franz, along with GM's European president, Carl-Peter Forster, wrote a letter to Chancellor Angela Merkel on Monday outlining their concern over the state of the German auto industry. Opel spokesman Andreas Kroemer said Monday that the letter called for tax breaks for new cars, arguing that such a move would be "socially and ecologically astute." Kroemer said they also called for a "line of credit with low rates to buy new, fuel efficient cars," in addition to a premium to abandon cars more than 10 years old."
That tax break sounds similar to what I saw the other day on television where a congresswoman (can't recall her name at the moment) was looking into the same, wanting tax incentives to buy new cars $50K and under; I think making the interest paid on the loan tax-deductible. It was during the "GM / Big 3 Bailout" segment. The only problem with it, the incentive was for buying any car, so it really didn't help GM / the Failing 3.
gasoline on board will go stale"
Here's an idea, charge it every 80 miles
2. Fire current management - if they ould not fix GM for 10 years or so, they can't do it now.
3. Hire people from other industries that did similar restructuring (heavy machinery, aerospace, etc.). They know enough about manufacturing to get in quickly and they know enough how to fix troubled industries.
4. To be safe, Michigan residents need not apply. No - we people from outside don't get Detroit. That's why Detroit brass has to go. Ford with Mullaley doing better is not a coincidence.
5. Force one of Shrinking Three move to West Coast, another one to South. Perhaps then the incest will end and they will get some ideas outside of their own limited imagination and focus groups consisting of their aunts, cousins and uncles.
6. Item 1 necessary to cut US operations of Buick (China is fine), Pontiac, Hummer and Saab without having to pay compensation to dealers (there is no money anyway so what's the point?). Either sell those brands or simply close divisions. Keep Chevy, Saturn, and Cadillac and maybe GMC (not really necessary, but may be OK). Any viable non-clone model (other than G8, are there any?) from those cut brands could be rebranded in form of either separate model, down- or upscale (or sports) package, depending on the context. Some line expansions may be possible. Thre and a half strong brands make much more sense than seven weak ones.
7. Item 1 is also necessary for restructuring union contracts, top to bottom. If copays, no Viagra coverage are OK for 150 mln Americans, who mostly are glad they have any meaningful coverage, so it can be for a fork lift operator, or asswmbly line retiree. Is it fair to do it? The answer is: it wasn't honest and fair to promise it at the first place - and it was dumb to believe such promise was sustainable. It was pretty much clear 20 year ago already the healthcare and pensions were ticking bombs. Anybody who refused to see it can only thank themselves for it.
8. Then what's left of it may get some public assistance - loan for operations and perhaps even a small grant for R&D. We might even promise it now, but only if they fullfill those conditions.
Painful? Sure. Will suck big time. But something like that would actually make ensure that any money dumped into that pit will not be spent on job banks, or other similar idiocies invented by geniuses from Michigan.
2018 430i Gran Coupe
Force one of Shrinking Three move to West Coast
I think the regulations on the West Coast would make it impossible to build cars here. California and Oregon have pretty much discouraged any business that is dirtier than Software development. Nevada and New Mexico would probably welcome the diversity that an automaker would provide.
1 - Everything is "GM" - all dealers and all brands are gone and replaced with a "GM" in every way other than marketing. Keep specific models. So the Lucerne, it's a "Buick" in the ads. But has "GM" on the car, and the model is a "Chevy Corvette" or a "Buick Lucerne"(physically have both words as the name)
.
The idea here is to walk into a dealership and see two or three models from each "make", because that's all there is. Think of how Mini does it. 2-3 models and that's it. Now imagine a dealership with 4-6 small sub-sections in it that have a couple of models for each "brand". (think a typical mall food court for a visual idea, just much fancier).
That way GM can shrink the inventory to 20 models or so total. The good ones. Only make the cars that people want and not what they need. Think Mercedes or BMW or VW/Audi. No rentals, no garbage. If a car sucks, drop it.
In fact, a maximum of thee models per "brand" would be a great way to enforce some sanity. If you want a new Chevrolet, you need to drop one car before making another to replace it. Having a dozen models that are hardly different at all is a colossal waste of time and resources.
2 - okay, this is huge, too. Have a couple of demos for each model at each dealership. And one in the show room. Nothing else in inventory. If you want a GM, you order it and it comes in 3-4 weeks. Mini does this and it works great.
Small, upscale, only the best offerings, and loads less physical inventory.
NOTE - Truck/GMC dealerships would remain unchanged. Commercial vehicles are being managed just fine(other than the lack of manual transmissions). All trucks and SUVs would be GMC. GM would be cars and cars only.
That's funny. Move South, and NOT worry about incest w/ cousins, aunts and uncles.
What a Cad!!!! :P
Maybe they then they would get some people working for them who understand why nobody in California buys GM cars any more (literally - the combined market share of GM and Ford TOGETHER in California is like 22%, mostly in truck sales)
2014 Mini Cooper (stick shift of course), 2016 Camry hybrid, 2009 Outback Sport 5-spd (keeping the stick alive)
2021 Kia Soul LX 6-speed stick
www.nummi.com/
There is heavy manufacturing in California. Of course, not as much as there use to be.
And Iluvsephia...let me remind you approximately 1 in 10 Americans live in California.....
Regards,
OW
And the LAST thing GM needs is to set up a design shop in California. There's serious group-think in the industry already, and most of the people who design the vehicles in the industry all come from several schools in California. We would just end up with more jellybean and ticky-tacky vehicles.
Go take a look at some of the pre WWII Mercedes roadsters and convertibles. OR most anything made in the 50s and 60s in the U.S. That's what happens when you design stuff correctly and don't hire form the same handful of design school.
GM is getting it's design studios in Europe, USA, Austrailia, S. Korea, and China to work together in designing it's cars. They've only been doing it for a couple of years.