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Posters here have asked why GM has not announced what it is doing to restructure. It is in black and white and released 1 month ago. On Feb 17 we will see what the status is. Well maybe if they would get a car czar to show it to.
Posters have asked when GM plans on being profitable. Again it is in black and white using concrete data points. Now that data may change (sales rate, actual asset sales amounts, etc.) but it is transparent on what they are doing and GM has given the info. We only need to read it. In fact GM released what was, at the time, considered the "worst case scenario" and had plans to work with that data point which they are now working to. If it does go below the "worst case scenario" GM will work with the car czar to come up with a revised plan and if the government does not agree then GM will go under.
Will this years sales be below 10.5 million? Perhaps to Probably would be my answer. But it will not be much below it. Now if we do go to an 8 million year we can all kiss our butts good by and get ready for the food lines. The government can print all the money it wants.
Toyota just announced they lost $4 billion in the 4rth quarter. That could mean a yearly loss of $16billion if things do not improve.
With losing $4 billion a quarter that can be gone quick. They also have $128 billion in debt.
What the heck does this mean?
http://www.autolinedetroit.tv/journal/?p=2431#more-2431
More tellingly, Toyotas total current liabilities (short term) now match its total current assets. In the past, Toyota’s current assets always exceeded its current liabilities. When a company’s liabilities exceed its assets, it has to dip into its cash reserves to make up the difference-unless its operations are generating positive cash flow. But right now Toyota is not generating positive cash flow.
2018 430i Gran Coupe
Regards,
OW
In terms of market share, a post-restructures GM should be well below 20%. As you have pointed out, those fleets sales have to be reduced a long way to affect profit to the plus side.
Let's hope things improve soon. It will be interesting to see the restructure plans take shape.
Regards,
OW
Well I'm going to be the optimist this time. An economic downturn this severe does not affect the whole economy equally. It first effects those industries where spending is discretionary. Vehicles along with travel, boats, some construction like new malls or 2nd homes, are all things that get hit disproportionately hard.
Industries like healthcare, pharmaceuticals, food production, utilities, and government are fairly stable. And then there's a group in the middle that are moderately affected.
Even during the worst part of the Great Depression, the unemployment reached 27%. 3 out of 4 had jobs. (Many argue that the government actually made things worse with their policies, especially protectionism).
So yes while I could see the auto industry dropping from 16M to 8M/year, that would not be across the board in the economy. I would think auto makers should have considered (as the Pentagon does war-game scenarios) what they might need to do. What sort of reserves do they need?
If governments don't get involved bailing out their industries, a few of the weaker companies in an industry will fail. The remaining companies are those that had better plans, saved more money, had better quality and happier customers. It would all work itself out, with enough carmakers left, getting customers from those that failed, to provide the market.
http://www.marketwatch.com/news/story/Toyota-warns-5-billion-fiscal/story.aspx?g- uid=%7B53DF3673%2DD299%2D4EA3%2D829F%2DC9E8827A2819%7D&dist=SecMostRead
SAAR will not reach the 10.5 MM in Feb. either
Really? Wow
I think though that Toyota may be in a bit more trouble than some realize. They greatly expanded their capacity the last couple years and now have a lot of brand new, in debt plants sitting around. GM, has a bunch of old paid off plants worth little but a lot of debt to bond holders and lots of legacy cost. Very interesting turn of events. BUT I am not saying Toyota is in some kind of trouble that will cause them to go out of business. Just not the position they were in 3 years ago.
At its regularly scheduled February meeting (February 2-3), the General Motors Board of Directors reviewed in detail the extensive plans and progress to date toward fulfilling the requirements of the Federal loan program which calls for an updated Viability Plan to be delivered on February 17.
“Ambitious and detailed work plans have been established for each of the elements called for by the plan. Significant progress has been made in each area, and much more will be accomplished over the next two weeks,” said George Fisher, lead director GM Board of Directors.
“The Board fully supports the aggressive plans of the management team, is pleased with the progress to date, and will continue to provide counsel and support to management as they make every effort possible to present a comprehensive and complete Viability Plan as required,” Fisher said.
For the third quarter - October through December - Toyota says it reported an operating loss of $3.97 billion compared to a year earlier profit of about $6.4 billion as a result of rapidly diminishing new car demand.
Can someone explain operating loss vs. net loss? I believe the operating loss is before other cost like restructuring, etc. This is the area where GM shows huge losses (net loss) and a much lower operating loss over the last 5 years as it has been restructuring.
Seems like it, though it's a bit on the expensive side to be considered one (muscle cars tend to be cheaper like Camaro and Mustang...maybe G8 is shooting for luxo-muscle?)
Uh, I somewhat disagree. I think G8 is entering a "new" niche called "muscle sedan", which in the 21st started by Dodge Charger and Chrysler 300 Hemi.
Of course, from a muscle car standpoint it's kinda expensive, but in the muscle sedan category it's most likely the cheapest.
Despite our differences you still respect the opposing views and base your posts with some credible logics and I respect that. Unlike some of our pals you know who and you know where.
Anyways, back on GM issue. I've just heard that GM is planning to say bye-bye to all 4 door pontiacs after 2010. Any news on that?
Despite all the slimming down they're doing right now I somehow doubt it'll be enough to survive. At least they gotta do something about the UAW contract first and firing all the upper management. I still think Wagoner should get canned, like, now. Fix the management and UAW and I believe GM will have a much better curvival chance.
Makes some sense. The G5 is only available in a 2 door already. The G6 is the only midsize GM available in a 2 door. The Solstice is only a 2 door. 2 doors are considered "sporty" though that definition has really changed from the 60's/70's when 4 doors were considered old man or family vehicles. But selling a 2 door does not make it sporty/performance. To keep Pontiac as more than a niche brand they need more vehicles like the G8 and I doubt that is going to happen.
Seems to me that the C11 crew will move in soon...I'll wager my portion of the bailout that the SAAR will not hit 10MM until the spring...April at best. So, they can throw out the "Worst Case Scenario" numbers now. I guess GM gurus never heard of a rolling forecast pegged to current market trends.
Regards,
OW
The result that occurs when expenses exceed the income produced.
A person or company with a net loss has not made a profit. Newer businesses often run at a net loss for the first few years while acquiring one-time expenses (equipment, buildings, technology, rights, etc.). However, every business should have a plan to work towards a breakeven point, and then onwards to profit!
What Does Net Operating Loss - NOL Mean?
A period in which a company's allowable tax deductions are greater than its taxable income, resulting in a negative taxable income. This generally occurs when a company has incurred more expenses than revenues during the period.
The net operating loss for the company can generally be used to recover past tax payments or reduce future tax payments. The reasoning behind this is that because corporations are required to pay taxes when it earns money, it deserves some form of tax relief when it loses money.
If a company has a net operating loss, it can apply this tax relief in two ways or through a combination of both. The company can apply the net operating loss to their past tax payments and receive a tax credit. It could also apply the net operating loss to future income tax payments, reducing payments they need to make in future periods. The terms of the tax relief and how it can be applied varies by jurisdiction but usually the NOL can be applied to the past few years (2-3) and much more to the future (7-10) years.
This term is really just fancy jargon for the company losing money. It makes sense that you should have to pay tax before you get "out of the hole". For example, say you lose $1 million in your first year of business and make $5 million the next year. It wouldn't be fair for you to have to pay tax on a profit of $5 million, because you are really only ahead by $4 million ($5 million profit - the $1 million loss).
Regards,
OW
If you would look at the restructuring plan you would see that the worst case scenario shows sales of 9.9 million for January/February. When GM said 10.5 million they meant for the entire year. For March it rises to 10 million.
Regards,
OW
Thanks for that. The board doesn't look like a bunch of lightweights.
I guess you saw my comments before I edited them out.
Getting rid of a board whether they are stupid or not is tough. They usually represent the largest stockholders. They have the clout. A guy with a 1000 shares would be lucky to be heard in a meeting. The Board now is looking to survive. If the company goes bankrupt their stock is probably worthless as the debts would be paid first, as I understand it.
From your stand point it is probably difficult to hear people refer to Wagoner and his staff as worthless. Some of them may be your friends. I just find it difficult to give credibility to Wagoner after 14 years of lousy performance. Never made a decent profit in his time on the top. When the Ford board realized what a screw up their cousin was as CEO they got a performer to take his place. The board at GM should have done that a long time ago. I understand they always got a nice dividend check each year. That tends to make you lackadaisical.
Unbelievable!
Regards,
OW
And that supposed to reflect what? I mean backgrounds are no more than past experiences, doesnt mean current line can still perform as they used to be.
Yes because the OEM's chose to shut down and not build the fleet vehicles, but no because the retail customers kept buying. When the plants do come up most of the purposely lost fleet sales will come back and there will be an artificially higher sales month. Looks like for cars it will probably not be February. However GM has opened up some truck plants and there will probably be a lot of fleet sales there.
Can it get worse than what the experts forecasted? Yes. I am actually amazed how good of a January there was.
That board epitomizes what is wrong with Corporate America. Look at where each has his roots. I bet if you were to go to each of those Corporate boards you would find similar names. These people all look out for each other. It is quite simple. Wagoner gets appointed CEO and he may sit on one of the boards represented by other board members. Too many times they make it to the top spot by who they hang out with and not by ability. I would say that is very true of Wagoner. Or he is just a puppet of the Board that has squeezed all the profit out of GM through shady sales and acquisitions. Any CEO that makes a huge bonus or salary when a company loses money is a leach on society, in my opinion.
The only reason I have any faith that Ford will survive is family pride. There is no family pride at GM. It is just a vessel to pour money from and then toss by the wayside. The people that run these corporations have no interest in the little guy sweeping the floor. The impact on the families when they decide in a meeting we have to cut 1000 employees. Or the impact that will have on the business. It is all designed to move the stock in an upward direction. Well GM has come to the end of the line. I would give them a 20% chance of survival if they file for bankruptcy. And call it what you want, that is what Obama has in mind also.
Wagoner is a member of the board of trustees of Duke University, the Tsinghua School of Economics and Management Advisory Board, the Board of Dean's Advisors of the Harvard Business School, and the Mayor of Shanghai's International Business Leaders Advisory Council. He is chairman of the Society of Automotive Engineers A World In Motion Executive Committee, and a member of The Business Council, The Business Roundtable, and the Detroit Renaissance Executive Committee.
I'm reminded of a disclaimer that exists on every ETF and mutual fund out there..."Past performance is no guarantee of future results and current performance may be lower or higher than the performance quoted."
And I bet they wrote that too.
Funny, I'd think that situation would be more likely at Ford instead of GM. But you can't tell me that Bill Gates led Microsoft to where it is just because his daddy was a high powered lawyer and his momma was connected with IBM board members. He put in his 10,000 hours programming in BASIC. And Wagoner and most of the board members probably put in similar hours too. (link)
While I have no clue on how closely tied they are in management, I can point out how much GM needs China's market right now. China, which absorbs roughly 500k GM cars per year, is the second largest foreign market for GM products after Australia.
I'm really sure I've seen it somewhere, I believe it was also mentioned in CNN news.
Wagoner moved up a corporate ladder until he arrived at the upper levels and has presided over a constantly dwindling market share for his entire time at both the North American helm and the world helm. Until absolutely forced to he has shown no interest in improving the product.
Timing?
(try any search for Malcolm Gladwell for work vs timing pop sci stories).
Regards,
OW
reminds me of the Board of Trustees at Colleges. Lots of CEOs, CFOs and smart investors but no one knows anything about running a college. right now, colleges got smacked by the downturn in the market. Now that everyone is finding out what these "smart" people were investing in, they don't seem so smart.
Exqueeze me? I see the Fusion, Escape, and Focus for Ford. Add in the F150 and that's more models than Honda has up there.
I do notice that GM only has one model up there though (The Silverado and Sierra are badge-clones) and Chrysler has nada. Toyota has the most at 6, which is impressive...but Ford is the next runner-up with 4. Honda with 3, then GM, Mazda, Hyundai, and Nissan each with 1. Who's #21? They really should be #20 since the Silverado/Sierra is listed twice (maybe that's another reason GM likes to have so many brands?).
And look at the direction this GM board has led the company...... GM may want to include some car peopel onthe board and forget about prestige.
True, but should we be surprised, considering it is a warmed up version of a 12 year old platform???
Yet, when you look at them in terms of percentage change, the major players are very close in changes. Camry, Accord and Malibu are close (only .2% between malibu and Camry). F150 and Silverado are similar, yet Tundra was at 40%.
Also, the Cobalt, which was another top 20 car, dropped out. Another rental car with another old platform. Also notice that Civic dropped like a rock too, yet Corolla was quite stable, at a 7% drop
As General Motors Corp. prepares to cut thousands of white-collar workers, the automaker apparently will not offer voluntary buyout packages, which have been customary in previous rounds of cuts, the Free Press has learned.
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GM is preparing to reduce its salaried workforce by a double-digit percentage, people familiar with the planning said. GM had about 29,000 salaried U.S. workers last year, according to the company.
The automaker declined to comment beyond a statement by spokeswoman Renee Rashid-Merem: "As GM outlined in its Dec. 2 restructuring plan ... the company said it expects to further reduce its U.S. employment levels through 2012 as it continues to reduce structural cost."
The Detroit automaker has already told Congress that it needs to cut as many as 31,500 salaried and hourly U.S. workers through 2012, as well as streamline its dealer network, reduce its core U.S. brands from eight to four and eliminate eight nameplates. The plan also calls for closing a total of nine powertrain, stamping and assembly facilities.
Buyout packages for the salaried workers appear to be off the table because terms of the U.S. loan agreement prohibit the company from using GM's pension fund to pay for those packages as it has done in the past, people inside the company said.
http://www.freep.com/article/20090209/BUSINESS01/902090332/1002/BUSINESS/GM+prep- ares+for+job+cuts++but+no+buyouts
Ford has $25.8 billion in debt, including about $17 billion in bond debt. Ford Motor Credit, Ford's dealer and consumer lending arm, has about another $28.2 billion in bond debt. Recall that Toyota has $20 billion in cash and ~$120 billion in debt. Ford also has about $20 billion in cash. Toyota does have access to many more billions in credit.
The three largest holders of bonds for Ford and Ford Motor Credit are Franklin Advisors, Dodge & Cox Inc. and Pacific Investment Management Co., or Pimco. A Dodge & Cox spokesman declined to comment, and Pimco did not return a phone call.
GM is struggling to win concessions from its bondholders even with the government's imposed targets. Pimco dropped out of discussions with GM last month.
"GM may get that done, but only because the government is asking for it," said Shelly Lombard, a bond analyst for Gimme Credit. "I think GM has more leverage with bondholders than GMAC had, but it is going to be hard. With Ford, it is going to be even harder."
Although Ford is in a better position than GM and Chrysler, it just reported a $14.6-billion loss for 2008, the largest loss in the company's 105-year history.
Also, Ford burned through more than $22 billion in cash and credit during the past year. The company ended 2008 with $24 billion in cash and available credit.
http://www.freep.com/apps/pbcs.dll/article?AID=2009902080408
One point was that the average age of the vehicle is 9 years. Cars are getting old. A couple years ago 80% sold their new car by 5 years. Not sure what that data point is today.
http://www.autolinedetroit.tv/show/1306/1?play
http://www.autolinedetroit.tv/show/1306/extra?play
“Tom Stephens is the perfect guy to take the reins of GM’s global product development,” Wagoner continued. “He’s had extensive experience in virtually every aspect of our global product development activities. With his 40 years at GM, Tom has an extraordinary understanding of our products and our organization, and is highly respected worldwide. I’m confident that with Tom’s passion for great products and vast
knowledge of advanced propulsion, he will continue to raise the bar in executing outstanding GM cars and trucks.
Does that apply to the UAW workers as well?