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Saving General Motors

August 6th, 2008 | Posted in: Financial, Politics

Unless you live under a rock, you are likely aware that US automakers GM, Ford, and Chrysler are under tremendous financial duress.

Having to do with a catastrophic drop in consumer demand for cars, and trucks in particular, GMs North American revenue dropped by $10 billion in the first half of 2008 while they lost a staggering $18 billion. CEO Rick Wagoner has assured investors that GM has adequate liquidity to keep running through the end of 2009 assuming a “low” estimate of 14 million US auto sales per year and a market share of 20% thanks to massive cuts, asset sales, and workforce slashing. But, for July, the annualized sales rate worked out to be 12.7 million.

Reports are out that the US automakers have begun lobbying congress for $35 to $40 billion in low cost loans over the next 2 to 3 years for the purpose of retooling their plants to build next generation fuel efficient vehicles like the Chevy Volt.

In response to these requests, Rep. Dingell of Michigan has begun asking his colleagues to speed up the rules to quickly allow automakers $25 billion in low cost loans. Those loans had already been authorized by last year’s energy bill and the guidelines for their disbursement are supposed to be written by December of this year.

Per Mr. Dingell “It is essential for the department to undertake this effort with urgency,” and “providing the domestic automobile industry with targeted and timely assistance will help stimulate the entire economy.”

Apropos to this topic will be a documentary tonight on CNBC entitled Saving General Motors. It will appear at 9PM EST .

This program will include footage of Bob Lutz driving the Volt mule and the battery lab, among other things.

It might be interesting to discuss the broadcast in real-time right here in the comments section of this post, should you be so motivated, and don’t forget to make your self a snazzy avatar for the comments by going to http://www.gravatar.com . I’ve even taken the liberty of inviting the show’s host Phil LeBeau to drop by.

With respect to this monumental witches brew of bad luck and bad decisions besieging US automakers and potentially jeopardizing our beloved Volt, Detroit News Reporter Tom Walsh sums it up well, “It’s that serious.”

But lets hope that through the Chevy Volt, the support of people like us, and the mission of this site to spread the word, we can all play a role in saving general motors.

See you tonight.

Posted by: Lyle

170 Responses to “Saving General Motors”

Statik Says:
August 6th, 2008 at 12:13 pm

Optimist or pessimist. This looks like a interesting piece.

They have been showing clips from it all day on the network. So if you can’t watch tonight and you happen to have a few hours to kill (and you enjoy business news), you can catch glimpses of it.

I have already seen the segment on Bob Lutz and the video of his first drive. Not alot new to us there, but it is nice to see it first hand and in glorious ‘non-streaming’ video.

From watching the commercials and 5 minute ‘teaser segments’, it looks to be about 30 mins of GM-business related info, a good 15-20 minutes on the Camario (obviously since they have a Dale Jr. segment) and hopfully a solid 5-10 minutes on the Volt.

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THOM Says:
August 6th, 2008 at 12:24 pm

Reports are out that the US automakers have begun lobbying congress for $35 to $40 billion in low cost loans over the next 2 to 3 years for the purpose of retooling their plants

“to build next generation fuel efficient vehicles like the Chevy Volt”

So what was the previous generation of fuel efficient vehicles???

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Jason M. Hendler Says:
August 6th, 2008 at 12:24 pm

The US Dept. of Treasury should issue $35 – $40 billion in “Green Bonds” to fund the loans the big 3 automakers require to remain solvent.

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Statik Says:
August 6th, 2008 at 12:28 pm

Lyle, this is a good editorial point you have made as well,

“CEO Rick Wagoner has assured investors that GM has adequate liquidity to keep running through the end of 2009 assuming a “low” estimate of 14 million US auto sales per year and a market share of 20% thanks to massive cuts, asset sales, and workforce slashing. But, for July, the annualized sales rate worked out to be 12.7 million.”

I agree with this 100%. GM does have the cash needed to ride out a downturn to 14-odd million in US auto sales.

The annualized sales rate do show a further weakening.

The REAL measure will be what effect the end of leasing in Canada and the ‘virtual end of leasing’ in the US will do (no Yukahoes, large trucks, coupled with the 2% interest bump on Cadillacs and generally ‘realigning’ of residuals…making leasing a very unattractive alternative).

While leasing only accounts for 20% of US business, it accounts for over 40% in Canada (we like to write stuff off I guess). GM itself has pegged the ‘cost’ of the loss of leasing to 10% (which is pretty big…and decently accurate I thought).

The even larger question is that we know leasing accounts for a proportionally higher percentage of ‘higher margin’ vehicle sales. What does this do to GM’s profitability? Surely this will translate to the bottom line in a big way, and thus, does this not also increase the cash burn rate?

Moreover, even if they do indeed survive through 2009, how does GM overcome this additional hurdle as well as all the current challenges? More money from the government is nice, but even GM’s share of 40 billion (if they get it…and whatever amount it is) won’t get them much further down the road without a good exit strategy.

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dagwood55 Says:
August 6th, 2008 at 12:41 pm

Why would “green bonds” be used for saving the world’s largest maker of gas guzzlers?

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noel park Says:
August 6th, 2008 at 12:43 pm

15-20 minutes on the Camaro??? Well my mother tried to teach us:

“If you can’t say anything nice, just don’t say anything at all.”

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mitch Says:
August 6th, 2008 at 1:10 pm

#5 “Why would “green bonds” be used for saving the world’s largest maker of gas guzzlers”

He asks as toyota is trying to push their new BIG truck that has worse gas mileage than any of the big 3, as is nissan, and as kia introduces the big SUV entry berago…

The big 3 (not just GM) maade what was very profitable market driven by consumer demand. and they have the largest line up of fuel efficient vehicles, many euro models pushing 60mpg.

get yer head out of your ..sand. Chrysler did it and paid it back with interest..

Look at the spin off damage if the big 3 go belly up there goes say 300,000 peoples incomes direcly, another 3 MILLION people indirectly, and another 30 million from the income spent from those jobs, then the downsizing in areas where the money they used to make and spend in that town, meaning other job losses.

If all 3 went under, the estimated job loss would affect about 50 miilion Americans and Canadians, and that is not the only fall out.

Loss of income tax, health benefits that the gov’t will cover, pensions, local taxes go up..

40 Billion is peanuts…

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Bernie Torbik Says:
August 6th, 2008 at 1:11 pm

Fortune http://money.cnn.com/galleries/2008/fortune/0807/gallery.gm.fortune/index.html has put together an excellent piece on GM’s foibles over the past 25 years.

After failing to learn the lessons of the 1973-74 and 1978-80 oil crises, they now want taxpayers to foot the bill for their incompetence. If GM is worth saving, the market will provide a buyer or buyers. And for those who don’t recall, Rick Wagoner convinced the GM Board of Directors to reject an alliance with Renault, which resulted in writing down over $30 billion in tax losses.

GM, Ford and Chrysler made BILLIONS in the 1990s which were pissed away designing big, more capacious gas guzzlers which Billie Bob and his ilk flocked to like flies at a picnic. If GM couldn’t handle it’s finances well then, why should I as a taxpayer write them a check now?

When (not if) GM does go into Chapter 11, it will free itself from two huge taxes: union labor contracts, and the stranglehold its $4 billion of annual interest payments have placed on the company. It will also be forced to rationalize its bloated management and corporate structure, eliminate redundant brands and focus on operational efficiencies. We should hope Chapter 11 happens ASAP!

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Jason M. Hendler Says:
August 6th, 2008 at 1:22 pm

Bernie Tordik,

The big 3 are NOT asking for grants or subsidies, they are asking for loans which they will REPAY. Up yours.

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mitch Says:
August 6th, 2008 at 1:22 pm

Bernie..(#8)

They did well, and the union wanted its share, and share they did, big grandiose options in contract (like the job bank, paying 8000 people to stay home – gm only) raising the standard of the middle class, all good.

Now, times changed, but when they needed some things back, the union became the spoiled child saying “no..its mine!” and the big 3 let it rest, until it became critical, hence the historic contract talks that just finished.

Management in all 3 is not the ONLY problem. I know guys in the bank almost 18 YEARS!! getting full pay and benefits, and they are not doing a DAMN thing..that is a 800, million dollar a year drain at GM alone!, and the bank is over 20 years old.

Their fiscals would likely be better if the unions had more give and take, instead of take..better in the good years, relinquish a little in the bad…

it is simply not that easy..Hoping chapter 11 happens would be great for GM, BAD BAD BAD for the retirees and employees, an dAmerica in general..

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brandon Says:
August 6th, 2008 at 1:24 pm

Getting off the subject a little bit read this article and is someone can answer a few questions for me. http://www.technologyreview.com/Energy/21155/

So basically instead of gasoline, you add water to your fuel tank. The water is then turned into oxygen and hydrogen by use of solar power. The hydrogen is then used in maybe a hydrogen engine, or maybe burned to create power for an electric car.

I think this is a much better invention than any plugin ev or the volt.

Is this possible to put into a car?

If this is possible this is awesome, no need for infrastructure. All gas stations have water!!! I don’t care what anyone says, water is renewable, fresh water can be limited, but we can purify salt water.

If your worrying about no sunlight at night driving, install some batteries, or another alernator to run the electrolysis for the water. As i beleive it doesnt require huge ammounts of electricity for this to happen.

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dagwood55 Says:
August 6th, 2008 at 1:25 pm

#7, Mitch,

Go look at GM’s sales and then go look at Toyota’s. Which one is 70% cars and 30% trucks and which is 60% trucks and 40% cars (even after the “collapse” of the truck market)? Which one has put a 48mpg vehicle on the road in mass quantities?

Now, tell me why we should issue “green bonds” for GM, rather than Toyota. What is GM going to do to justify “green bonds?”

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Aspherical Says:
August 6th, 2008 at 1:28 pm

Chapter 11 would be a horrific situation. It is not only affect the GM workers, but will trickle down to the suppliers as well. Imagine what would happen to American Axle or Delphi, for example, if GM no longer honored their contract. Pensions that the retired rely on would disappear. It would be a Great Depression in the Michigan area… Come on, GM, you have to pull through this!

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Bernie Torbik Says:
August 6th, 2008 at 1:32 pm

#9 – Jason Hendler: if you can read and interpret a Cash Flow Statement and Balance Sheet, I suggest you read GM and Ford’s most recent masterpieces. Once you’ve done so, explain how they’d repay any additional debt. I also refer you to Cerebus’ recent announcement that their lenders didn’t renew several of Chrysler’s credit lines.

#10 – Mitch: Chapter 11 might be bad for some employees, but not much different than the necessary restructurings that have occurred in the IT industry and other industries. And it’s just a foretaste of what’s to come with Social Security. You can’t promise benefits that you can’t repay, borrow from future profits (as GM did from 1960-1980) and not expect to have trouble down the road. If the unions have to take a bullet, so be it.

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Joshua Bretz Says:
August 6th, 2008 at 1:32 pm

I say no loans unless GM commits to a 100% EV portfolio (a la Mercedes)

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brandon Says:
August 6th, 2008 at 1:33 pm

If the hydrogen doesnt work… Use this: http://www.technologyreview.com/Energy/21125/

Thermoelectric. This will use the 1.4L ICE’s heat that is produced into more energy to charge the battery…

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Bernie Torbik Says:
August 6th, 2008 at 1:34 pm

#13 – Aspherical: Detroit has been in a Depression for the past 30 years. The price of the average home in Detroit ($19.5k) is now less than the price of a new car ($22k).

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Anthony BC Says:
August 6th, 2008 at 1:38 pm

GM doesn’t need saving, all is well in 2009!

GO GM, GO VOLT for 2010!

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Sean Says:
August 6th, 2008 at 1:41 pm

#12

Why would you want to give green bonds to a non-AMERICAN company. We need to protect our country first and not worry about others.

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mmcc Says:
August 6th, 2008 at 1:42 pm

Heard a radio ad this morning from a local Dodge dealer…. 50% off MSRP on new full-size pickups. Ouch!

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Bernie Torbik Says:
August 6th, 2008 at 1:47 pm

#16 – Sean: it depends upon what you mean by “an American company”. Last time I checked, the vehicles produced in NA by Toyota, Honda and Nissan had a higher domestic content than those made by GM, Ford and Chrysler.

That said, no handouts, period! If GM wants help, let them go into Chapter 11 and cut Rick Wagoner’s outrageous salary.

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Jack Says:
August 6th, 2008 at 1:47 pm

I like how this thread is going, we’ve gone from saving GM to giving green bonds to Toyota. I don’t recall anything about Toyota being in trouble or them asking for a hand-out (sorry Jason, I meant low interest loan that they will pay back with interest).

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David Studhalter Says:
August 6th, 2008 at 1:54 pm

GM should offer the Volt at a fixed price, (kind of like the Tata’s 100,000 rupee car), except that the deal would be you have to pay 15 or 20% now, with guaranteed delivery and features by a certain date. If the delivery date is missed, the company would pay back the advance + 3.5% interest (with some kind of financial surety bond). I think it would raise at least a few tens of millions to help with development costs.

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M1EK Says:
August 6th, 2008 at 1:54 pm

GM, and the other two, pushed SUVs as a way around CAFE – they first engineered the loopholes (mileage and emissions) and then convinced people they were reasonable family vehicles so they could fully exploit those loopholes, making their executives fat and happy in the process. For that, alone, they deserve every bit of trouble they’re getting – they made the Saudis a lot richer; made us a lot poorer; polluted more; heck – it’s hard to think of a bad thing today that can’t be linked to the decision to convince people they needed trucks rather than losing the contempt the Big 3 (especially GM) have had for people who actually wanted to buy small cars.

I view the decision to go that way as practically tantamount to treason – they made us so much more critically dependent on oil from people who are trying to kill us, just so they could avoid having to compete with the guys who really were trying to just build sensible vehicles.

So, no, they weren’t just satisfying consumer demand. Nobody wanted an SUV until Detroit tried to convince them they were cool and cars sucked. GM can go bankrupt for all I care – and this is from a guy whose first new car was a Saturn (which I really liked). Get real, folks; they don’t deserve a bailout.

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jan Says:
August 6th, 2008 at 2:01 pm

What in a nut-shell is the 2010 labor agreement all about? I never see it refered to on this board. GM seems to want to make it thru 2009, like 2010 is the promised land.

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mitch Says:
August 6th, 2008 at 2:03 pm

Why not then make it a stipulation that the Green bonds must go to green projects. Mandatory seperate accounting for the funds, audits, then the $ go to green products like volt and 50mpg vehicles. set a standard for them, then stick it!.

I am not against it, it is accountability I require. Make it for any company going green, not just cars.

Letting them go under and saying if the union bites the bullet so be it is really bass ackwards thinking..the financial damage would be huge.

The information in #17 would be everywhere..Windor Ontario housing prices are dropping like a stone because of the auto layoffs, and they were not hit all that hard compared to many places. housing costs went back to 1994. (i I know because a buddy of mine there is moving to Oakville to keep his Ford job, and has to list below his purchase price..)

Thisnk of the mortgage defaults…the extrapolation is soo friggin big, no one wants to contemplate it.

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Nuclearboy Says:
August 6th, 2008 at 2:11 pm

GM does deserve a bailout. GM is a net positive for the US. They produce many jobs and pay many taxes. They also provide us with significant manufacturing capacity. I don’t give a crap about some foreign company that sets up shop in the US to save shipping costs. in the end, they are not a US company and will not have loyalties to the US. Our country needs companies like GM and we should help them through dips so that they are around long term. Tax money is pissed away on all sorts of things. Loans for a US company in need are not a big deal. There are industries that have big capital investments where there are only a few big players left. Would any thinking US citizen like to see Boeing go under and let Airbus take over. I hope not.

GM going bankrupt is something that any US citizen should care about. If we had 10 big car manufacturers, or 5, then it would not matter so much. But we have 2. This is something to give a damn about.

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dagwood55 Says:
August 6th, 2008 at 2:13 pm

Implying a “green bond” for Toyota was an inadvertent mistake.

What I want to know is what justifies giving GM a “GREEN” bond? What has GM done to assert GREEN leadership? There are MANY projects that could be offered GREEN bonds instead that would advance GREEN causes much faster.

Further, these GREEN bonds could be handled as loans to individuals, rather than further enriching our largest corporations (and further lining their CEO’s pockets).

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Lurtz Says:
August 6th, 2008 at 2:16 pm

A new candidate for President suggests both new oil drilling and tax incentives for electric and hybrid vehicles.

See you at the debates.

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paddyk Says:
August 6th, 2008 at 2:16 pm

GM, Ford Should Receive $25 BILLION in Plant Aid, Dingell Says

——————————————————————————–

http://www.bloomberg.com/apps/news?pid=20601087&sid=aviz2sm08FDg&refer=home

The loans were authorized in last year’s energy bill, and rules to free up the funding are supposed to be written within a year of its December passage, Representative John Dingell said yesterday in a letter to U.S. Department of Energy Secretary Samuel Bodman.

—————————————————————-
Detroit 3 ask up to $40 billion in loans

http://www.freep.com/apps/pbcs.dll/article?AID=/20080805/COL06/808050401/1014/BUSINESS01

Detroit’s three automakers are urging Congress to make as much as $35 billion to $40 billion in low-cost loans available during the next two to three years to assure that the companies survive long enough to retool and build a new generation of fuel-efficient vehicles.

——————————————————————————–

for those so inclined, here is the letter that Congessman Dingel wrote to Sec. Bodman:

http://energycommerce.house.gov/Press_110/110-ltr.080408.DOE.EnergyIndSecAct.pdf

Perhaps a campaign to support the Congressman’s efforts may help:

Written correspondence and phoning is particularly effective. Calls to Secretary of Energy Samuel. W. Bodman (phone: 202/586-6210 or 1-800-342-5363), by law, must be logged and returned or answered. There is no such requirement for e-mail or letters.

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Gsned57 Says:
August 6th, 2008 at 2:17 pm

M1EK,

1970’s Jeeps, 1960’s land cruisers, 1990’s blazers, and 1980’s scouts were fricken awesome. The evil corporations didn’t need to convince me of that, it’s just the way it is. Riding mopeds is fricken lame, and I don’t care how expensive gas is. I’m not saying I won’t ride a moped if that’s what I gotta do, but given the choice I’ll take a 66′ land cruiser with a winch on the front any day. Don’t blame the big 3 for cheap oil. Don’t blame big oil for cheap oil either. There is a reason Europe has such a higher national gas mileage average than we do. They tax the hell out of gas and make it tough to own a car.

We can either tax ourselves to death or invent our way out of expensive oil with tech like the volt. You aren’t gonna find anyone on this site saying ohhhhh I hope they make an efex scooter because that would be LAME. We want our muscle cars, trucks, and suv’s, and we want domestic fuel too.

If you are against the automobile, this probably isn’t your forum.

I know I know PDFTT, but I had fun doing it

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Frank D Says:
August 6th, 2008 at 2:17 pm

Now that there is talk of possible government back loans or bonds. There should be a guarantee from GM that if the Volt does get produced, The Volt should be available in the US in much more quantities than is currently promised. It is possible for a global brand like GM to divert these Volts to the market that is more profitable. Remember, the euro is a better bet in value, and will be for a while. I think this is a very important issue, please look into this Lyle. Thanks

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Jackson Says:
August 6th, 2008 at 2:20 pm

Yes, Chrysler paid their government loan back, and good for them. They used the money to bring a new kind of vehicle to market; a vehicle type other carmakers had refused to make, even though there was public support for it: the Minivan.

What happened after that?

For my money (and as a taxpayer, it is my money), Chrysler had their shot. Offer the loans to GM and Ford. On second thought, offer the loan to the only one of those two who have agreed to bring a new kind of vehicle to market that the public wants, and that they and the nation drastically need.

Well, Ford does have the Escape. Maybe they can have a little loan .

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mitch Says:
August 6th, 2008 at 2:27 pm

#28
“What I want to know is what justifies giving GM a “GREEN” bond? What has GM done to assert GREEN leadership?”

Google GM green initiative, I jsut did out of curiosity, 238,000 in 0.25 seconds, most not on a GM site., sites like the Greenblog, green world are praising GM saying it must “shake its fuel hungry suv image” and that image is what many see when they see GM,

(too many trees!!! where is the forest?!?!)

Not everything Toyota does is green (sequoia, tundra, FJ) neither is GM fuel pigs, (metro, G5, firefly)

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Morgan Says:
August 6th, 2008 at 2:34 pm

M1EK:

I don’t even know where to start….SUV like vehicles were hugely popular before “SUVS”

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Bernie Torbik Says:
August 6th, 2008 at 2:53 pm

#27 Nuclearboy – “… GM going bankrupt is something that every U.S. citizen should care about…”

Why? Apart from the obvious – GM has been technically bankrupt since late 2005 (negative net worth) – Chapter 11 allows a company to reorganize its affairs. It’s not the end of the line, if the opportunity is used wisely. Many airlines have done it, for starters.

I know it’s a stretch to use “wise” and “GM” in the same sentence, but it’s a possibility. The market would force GM to make some hard decisions its current Board continues to avoid, including shutting down Buick, Pontiac and Saturn. Maybe its union pensioners would be affected; maybe they wouldn’t. Either way, GM is forced to improve its cost structure.

If GM and Ford are given loans, where’s the incentive to become more efficient or make some hard choices? All that will happen is that the taxpayers will piss billions down the drain so that GM can buy itself a few more quarters and Rick Wagoner et al continue to collect their indecent (relative to performance) salaries.

I like the market-based solution precisely because it forces the inevitable to happen, without wasting my tax dollars.

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Carcus Says:
August 6th, 2008 at 2:54 pm

Nice, another $40 billion sweetheart loan (bailout) straight out of my pocket, extorted by the IRS, handed over to those with the biggest lobbying budget, (and advertising dollars) begs the question . . . .

Lyle Dennis = EV Pundit or GM Pawn?

I’m a fan of the Volt technology. I am a fan of the free market. I am absolutely opposed to totalitarianism. The GM loan, along with several other recent fiscal events (Bear-Stearns, Fannie Mae, Freddie Mac) are rapidly moving us in the wrong direction. I hope the American Public was paying enough attention in their high school civics class to understand this.

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Jim Mbongo Says:
August 6th, 2008 at 2:59 pm

All the problems GM face today have only one source: there are too many fake auto journalists and experts financial analysts in America, and as they have discovered that writing on GM help sell their papers, they only they do is invent and criticize GM. This is shame

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ThomC Says:
August 6th, 2008 at 3:02 pm

#11 Brandon
>> So basically instead of gasoline, you add water to your fuel tank. The water is then turned into oxygen and hydrogen by use of solar power. The hydrogen is then used in maybe a hydrogen engine, or maybe burned to create power for an electric car.

Hardly. I understand you are asking a serious question and I’ll answer to the best of my ability.

A hydrogen powered engine (regardless of what its driving… car, generator, etc.) takes pure hydrogen and chemically combine it with oxygen in what is called an “exothermic” reaction. An exothermic chemical reaction is one in which two (or more) chemicals have energy bound in their structures. When the chemicals combine, the new chemical compound has less total energy then the original chemicals had. The excess energy manifests as heat which is typically used to perform work.

This is true of any exothermic reaction including the combustion of petrolium products (e.g. gasoline or diesel). What’s special about the hydrogen-oxygen chemical reaction is that the reaction result is water.

While the creation of water from hydrogen/oxygen to water is exothermic, breaking water in to hydrogen and oxygen is endothermic, which is the exact opposite. This process is called “cracking” and it requires external energy to make it happen and it’s going to take a LOT more energy than you’re going to get from any solar panel that will fit on the roof of a car.

OK, Enough of the basic chemistry lesson… sorry about that but it was necessary for what’s next.

You cannot put water into a car and expect to come out with hydrogen, oxygen and enough energy to make the car move.

What will actually happen in a “hydrogen economy”is that distilled water will be cracked in an appropriate faciltiy. Then the hydrogen would be distributed through some system that’s similar to the gasoline/diesel distrbution system we have now.

Interestingly, an “appropriate facility” could be a “Thorium Salt” nuclear reactor where hydrogen cracking is a secondary product of a nuclear reactor that’s been built to generate electricity. I’ve never really been a fan of hydrogen fuel because it takes substantially more energy to crack water than you will get back out of it to perform work. With a nuclear reactor, cracking water could be developed as part of the reactor’s cooling system. Kind of a free lunch.

One of the things that has bothered me about hydrogen cracking is that a byproduct of the process is pure oxygen (occuring as O2 ozone) and I’m afraid that large scale water cracking will result in the production of toxic/corrosive levels of oxygen. To keep that from happening, I believe the cracking facility would have to capture both the hydrogen and oxygen and distribute them as necessary to generate water with no excess of either element. If I’m correct, a hydrogen powered vehicle would necessarily have both the oxygen and hydrogen on board, otherwise the vehicle will literally be sucking the oxygen out of the air.

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Cautious Fan Says:
August 6th, 2008 at 3:05 pm

#27 Nuclear Boy

GM doesn’t have loyalties to America. They’re loyal to the dollar. That’s why they make tons of their cars overseas. So why should I, a taxpayer, be loyal to them just because the founder was American? I wouldn’t expect GM to do me in favors. They’re job is to make money.

To your Boeing example, as an engineer at Boeing I’d be depressed at night if I knew that I had to be subsidized to stay in business. Hopefully I’m worth my pay and if I’m not, I need to find a new job. If Boeing can’t make an airplane that competes with Airbus, we absolutely should go out of business. Then I’ll go work for Google or Microsoft.

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rvd Says:
August 6th, 2008 at 3:12 pm

I would not give them a cent!
Inefficient GM management – not worth saving.

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mitch Says:
August 6th, 2008 at 3:13 pm

#39 Thom

But can we fill the trunk with lemons and use that as an auxillary power source to seperate the H2 from the O? that is what we did in school..

LoL

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Ray Says:
August 6th, 2008 at 3:14 pm

Want to save Big $$$$ ?? GM should become more streamlined from the TOP Down…. there is no way on earth that one of the ( HOW MANY ??? ) senior vice presidents deserve a multi million dollar salary… with the “bonuses”….. I’ll bet that 2/3 ’s of therm don’t even show up for work more than a couple of days per month..

Reduce the top end of the company by 30 % (save BILLIONS).. get the Volt out in the fall of 2009…. at a reasonable price….with a failsafe warranty…..

Apply the technology to the larger cars (just increase battery size to make up the extra milage)

Then do it to the SUV’s and Trucks.

Problems solved

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Jackson Says:
August 6th, 2008 at 3:26 pm

ThomC

Mostly right, but Ozone is actually a molecule containing 3 oxygen atoms (O3). The kind we breathe is a molecule containing 2 oxygen atoms (O2), which is pretty harmless unless you light a match in a pure atmosphere of it. Monatomic Oxygen (just the single atom) acts as a “free radical,” a highly reactive form which can cause breakdown of/damage to complex hydrocarbon compounds (like those found in people), and so would be a health risk. I don’t know which form results from cracking, or electrolysis.

There is a (new!!!) method for using sunlight to chemically split water into hydrogen and oxygen,

http://gizmodo.com/5031810/new-way-of-storing-solar-energy-discovered

… but as you correctly say, you’d never be able to make enough useful hydrogen from the sunlight that falls on a car to be practical.

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rvd Says:
August 6th, 2008 at 3:28 pm

To #43 Ray Says
It is like asking GM CEO to fire himself to save millions instead of firing millions to save a buck. The former ain’t gonna happen!

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mitch Says:
August 6th, 2008 at 3:30 pm

#40.

but they do get bail outs…
http://www.progress.org/tcs04.htm (boeing)
http://seattlepi.nwsource.com/business/39369_boeingweb.shtml (airlines)
and here boeing was asking for 24Billion : http://news.bbc.co.uk/1/hi/business/1550262.stm

Gee..seems that another great American company had troubles, needed help, and are now back on board the well run list. but it hurt..like the big 3 are now..read it over..replace boeing with GM (or Ford, or Chrysler), and it looks pretty familiar.

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Carcus Says:
August 6th, 2008 at 3:35 pm

And furthermore, how about this blast from the not so distant past:

Life in the Slow Lane: Tracking Decades of Automaker Roadblocks to Fuel Economy, (2003)

http://www.ucsusa.org/clean_vehicles/cars_pickups_suvs/life-in-the-slow-lane.html

In regards to fuel economy, the american auto industry (and public) is like a spoiled child. He’s been told over and over not to tease the dog, but he screams, cries, doesn’t listen, and keeps on teasing the dog. Finally, the dog bites (again, just like in ‘73 and ‘79). Giving GM a loan would be like blaming the dog and pacifying the child with a donut.

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Jackson Says:
August 6th, 2008 at 3:45 pm

The one who could answer our question about how oxygen is emitted when hydrogen is made from water is nasaman.

I like Thorium. Thorium is our friend (only Australia has larger reserves than North America). It’s a pity that no one has been willing to launch the 20-year research program that it will take to get working reactors built, here. I guess Congress had more important things to do. Jimmy Carter, as president, was quoted as saying that the US nuclear industry needed to be based on the Thorium cycle; but as far as I know, he never lifted a presidential finger to make it happen. How different things might be today, if he had.

(#47):

Your doughnut and dog analogy is flawed IMO; you are actually deciding whether or not to send the injured child to the emergency room before he bleeds to death.

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RLM Says:
August 6th, 2008 at 3:56 pm

I listened to Paris Hilton’s response to McCain. Amazing, she made more sense than any of our polititians.

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Lurtz Says:
August 6th, 2008 at 4:02 pm

RLM – “polititian” – a Freudian mispelling?

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JEC Says:
August 6th, 2008 at 4:03 pm

Brrrrrrr…..I stuck my toe in the water of this post, and I think I will stay out until it warms up a little.

Maybe there is to much chlorine in the postings?

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Statik Says:
August 6th, 2008 at 4:04 pm

#8 Bernie Torbik
#14 Bernie Torbik
#17 Bernie Torbik
#21 Bernie Torbik
#36 Bernie Torbik

I just had a nice 4 hour afternoon cat nap…it was glorius. Then I come back here and your ‘bringing the noise,’ keeping it real…and all that. I’ve read the thread and don’t feel I have to comment at all, other than to send a shout out.

With you ‘manning the fort,’ hardcore style, I think I’ll take the family out to supper and see the new Batman movie. (I know I should have seen it ages ago, leave me alone, I’m in my 30s now I don’t like crowds anymore…I wait 3-4 weeks and go on a Wednesday, lol).

Catch you later…keep the faith.

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Cautious Fan Says:
August 6th, 2008 at 4:08 pm

For those who want the Gov’t to save GM, I’d like to propose a another idea. Buy GM bonds. If you want to support an “American” company, the free market has given you a perfect way to do it. Plenty of folks believe they’re actually a good buy too.

Using the Government to loan the money is simply forcing me, and every other taxpayer to do it against our will, even though I believe that it is not in America’s best interest. Some think it’s in America’s interest. So do your patriotic duty and buy their bonds yourself. Don’t pass the buck onto me.

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noel park Says:
August 6th, 2008 at 4:19 pm

Governments around the world subsidize and incentivize their auto, and other, industries in one way or another. It is their public policy as part of their efforts to try to expand and maintain their industrial bases as they seek to expand and maintain their economies.

Does anyone believe that Japan, Korea, Germany or France would allow their auto industries to slide into oblivion without taking such steps as these? I understand that Renault, which in turn owns Nissan, is a direct creature of the French govenrment.

I direct bloggers’ attention once again to the books of Professor Chalmers Johnson, the so called “Blowback Trilogy” – “Blowback, The Sorrows of Empire”, and “Nemesis”. Professor Johnson maintains that we have “hollowed out” our manufacturing base by allowing the huge negative balance of trade with countries which allow us basing rights for our imperial military.

So, while I take a back seat to no one in criticizing Detroit for its disastrous product decisions, the US government’s hands are not clean either. When we finally get to some tipping point level in our manufacturing economy, we will cease to be a First World country, with all of the ramifications that such will have for our children and grand children. We waste more than this every year in military cost overruns and procurement of weapons of war which never perform their intended functions.

According to Lyle’s post, these loans are supposed to be tied to tooling up for the next generation of fuel efficient vehicles. Hopefully, there will be some controls included to make sure that such is what the money is used for, and that it is not squandered on executive bonuses, stock options, and develoment of vehicles irrelevant to the goal. And yes, I do include the Camaro as one of the latter. This is not the time or the place.

So, as much as I hate this, my suggestion is that we hold our noses and JUST DO IT. The alternatives are even worse.

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MetrologyFirst Says:
August 6th, 2008 at 4:28 pm

I don’t know were to start.

Why is it that most people here simply will not take responsibility for their vehicle choices? Why is it “GM’s fault” Americans bought SUV’s in the past? This is immature thinking, at best. NO ONE made me buy anything.

We have grown so spoiled in this country that we won’t take responsibility for our actions. It’s an epidemic everywhere. IT’S NOT GM’s fault we bought SUV’s!! We wanted them!! Case closed.

Else:

I guess then it is Anhieser Busch’s fault we buy budwieser and become alcoholics.
I guess its RJ Reynolds’ fault we buy cigarettes and get lung cancer.

Constant comedy by some of you “adults”. I’d be laughing if it wasn’t so pathetic.

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maharguitar Says:
August 6th, 2008 at 4:35 pm

Let’s re-write history. Here’s a hypothetical conversation that takes place in GM headquarters in 1990:
GM Marketing VP: We can sell all of the big SUVs and Pickups that we can make and at a huge markup.
GM Sales VP: There are lines running out the door waiting for Suburbans and Tahoes.
GM Visionary CEO: Don’t these people know that we are almost at peak oil and they should be buying fuel efficient cars. What if we discontinued the big gas guzzlers and only sold high mileage and alternative fuel vehicles?
GM Sales VP: Our fuel efficient cars are gathering dust on the lots and we only make a nickel on each one.
GM Marketing VP: What alternative fuel? Fuel cells are 30 years away and current battery technology gives you 50 miles per charge for a golf cart. Who’d pay for that?
GM Visionary CEO: I know that I’m right. What about hybrids?
GM Marketing VP: Who’d pay $3000 extra to save $1000 on gas? Our customers aren’t idiots.
GM Visionary CEO: California is making us go electric, what about that?
GM Marketing VP: We’ll do electric for California but they’ll be expensive. We’re planning a test lease program. Maybe I’m wrong and there will be a huge demand.
GM Sales VP: Remember guys, If we don’t sell the SUVs and Pickups, they’ll go straight over to Ford and buy them there. Our dealers are screaming for more trucks. Plus, we make a killing on each one.
GM Visionary CEO: What would our market share have to be to be profitable if we sold mostly high mileage vehicles?
GM Marketing VP: Current figures indicate that we’d have to be at least 60% of the market to break even.
GM Sales VP: That’s a lot of cars and we aren’t selling those right now. They’re just sitting on the lots.
GM Visionary CEO: I don’t care! I know that I’m right. Let’s make GM the technology leader. If we build them, they will come.

The CEO was good to his word. GM ceded the SUV and Pickup market to Ford. GM dealers sat on thousands of unsold cars. The EV1 was too expensive and was a technological dead end. GM’s hybrids cost $3000 more than an equivalent ICE only car and it would take 10 years to make up the difference in fuel costs. Since almost all of their automotive profit came from truck and SUVs, GM was never profitable again. Their market share plummeted, R&D budgets were slashed, Factories were shuttered. GM didn’t make it to the year 2005.

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Ed M Says:
August 6th, 2008 at 4:43 pm

THOM #2

The previous generation of fuel efficient cars were built by the Japanese. The way the article is worded it sounds like GM ?

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Ed M Says:
August 6th, 2008 at 4:48 pm

maharguitar #56

You must have been the proverbial fly on the ceiling for this one.

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dagwood55 Says:
August 6th, 2008 at 4:50 pm

#34, Mitch,

Metro? Firefly? Are those at my local Chevy dealer?

Tundra – Max 200K/year. Right now, they’re doing just about 10K/month.
FJ Cruiser – probably 50K/year
Sequoia – 800 units last month. That’s right, less than 1,000.

In addition to all their other small cars, close to 200K Priuses/month. None of their big bruisers currently sell as well as the Prius. Toyota makes small cars and they make money on small cars. That’s what they do.

GM has been trying very hard to upsize the American consumer for well over a decade and they’ve been doing it perfectly cynically to game a system they lobbied to be defective in particular ways.

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Aspherical Says:
August 6th, 2008 at 4:51 pm

I don’t want to criticize GM “too much” because they gave the people what they wanted (trucks, Escalades, etc…). The problem is that the market (the price of oil) changes much faster than an auto company can. It is easy to criticize GM right now, but they are in process of transitioning to a more diverse portfolio which will be more resistant to market fluctuations (at least, I hope). The media is beating them while they are down…

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Jean-Charles Jacquemin Says:
August 6th, 2008 at 4:53 pm

Noel #54

I intended to answer Jason #9 and I finally decided just to say this :

If the loans are low cost, somebody must pay the difference between the market interest rate and the subsidized one. Who ? The taxpayers, us.

So that, if even the car makers repay their loans, they will be subsidized.

The question is I think : is it the last time they will ask for help ? Will they really change their behavior in the future ? Better forecast what are the real needs of the consumers in a true (not dreamed of) economic system ?

As usual, the move of the US car makers is as old as the world is : trying to privatize the profits and socialize the losses.

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john1701a Says:
August 6th, 2008 at 4:55 pm

The problem with GM is their mocking of hybrids years ago, proclaiming them a wasteful “stop gap”.

In other words, they broke a fundamental business rule by not staying diverse. Now they are paying the penalty for putting all their eggs in one basket.

If they would have also been developing a high-efficiency technology while selling large quantities of monster-size guzzlers, things could have been different. But instead, they delayed taking any action until it was absolutely necessary. Now, something to competitive to sell is still years away.

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Van Says:
August 6th, 2008 at 5:04 pm

No one can save GM from bad management. Their vehicles are not selling because folks are buying vehicles from other car makers. I hear the Prius is selling well.

Nissan just announced it is investing in lithium battery production facilities, but has GM?

Every time we turn around we get the feeling GM is slow playing Volt development while it looks at its lineup of fuel efficient vehicles and sees they just do not compete with Toyota, Honda, Nissan and others.

I hope the UAW and all those voting for the “no to drilling Democrats” are happy.

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Carcus Says:
August 6th, 2008 at 5:11 pm

Maha,

That hypothetical GM boardroom conversation was pure genius. Everything’s clear to me now. GM really had no choice.
Hey, while your at it, could you put together your version of what happened in the early 90’s at Toyota’s boardroom when they were thinking about developing the Prius? Oh wait a minute, never mind. I can read about it here,

in Fortune magazine:

Toyota: The Birth of the Prius
http://money.cnn.com/2006/02/17/news/companies/mostadmired_fortune_toyota/index.htm

Maybe your hypothetical conversation could get published in Mis-fortune Magazine

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Joe Says:
August 6th, 2008 at 5:23 pm

If GM goes bankrupt, it will cost this country a whole lot more than 40 billions, and GM is only asking for a loan…. not a giveaway.

http://www.pbgc.gov/workers-retirees/benefits-information/content/page13181.html

If GM retirees lose their pension, the US government will have to pay sixty percent of the retirees pension. Sixty percent of approximately 500 thousand retirees comes to a huge huge amount and it’s paid until the pensioner dies. There is no doubt in my mind that our government will have to pay one way or the other. In a way the US government brought it upon themselves when they allowed foreign auto companies into this country with huge advantages over the domestic auto companies. Decades ago GM tried to establish themselves in Japan and never succeeded. The US government could have done the same as what Japan did.

http://www.uwsa.com/issues/trade/japanyes.html

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Morgan Says:
August 6th, 2008 at 5:28 pm

53 Cautious Fan:

Okay, I do, and tit for tat then you should not be eligible for any tax credits for purchasing any sort of house or car: Volt, Prius, or anything else.

After all…why should I have to subsidize your purchase of a house I don’t live in and a car I don’t drive? Right?

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TED in Fort Myers Says:
August 6th, 2008 at 5:32 pm

What ever it takes to get GM and Ford and Chrysler converted to electrics is a necessary expense. I don’t care whose fault it was that we stayed on gas way too long, get off it now and buy the battery electrics we can fuel with homegrown fuel, US fuel. Make those cars better than the Japanese or any other country can and we can sell em worldwide. We have looked beyond tomorrow or next month and the answer is electric, not inefficient, hard to store Hydrogen. Help em retool and they will help us out of the recession we are not in according to some. Half the people who buy these cars will refuel them with homegrown solar. We solve the economy problem, the air pollution problem, and the Terrorist problem all at the same time with no war required. TED

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Morgan Says:
August 6th, 2008 at 5:49 pm

64 Carcus:

Toyota had a domestic population that could support the development until foreign markets were ready for the vehicle and their domestic market has always been about small cars. It was also heavily subsidized by their government and, to a certain extent, ours.

The same was not true for GM. GM whose domestic markets LOVE big cars contrary to Dagwood et al saying differently. Before SUVS, it was Vans, before Vans, Station Wagons, before Station Wagons it was land yachts and muscle cars

Why the HATE for a freakin company I don’t know. Conversely, the smug Toyota love drives me crazy.

Here is a fun truth for everyone:

No Haggle at Toyota merely locks in the dealer’s profits they make money from you AND Toyota.
and
That GM dealer who you swear screwed you only made money from GM on your purchase (dealer holdback, no profit from you)

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Frank D Says:
August 6th, 2008 at 5:50 pm

To #54 Noel Park- Well said. We all must realize these corporations are global! If the US engages in tax payer backed loans for GM’s survival, we MUST demand that GM sell Volts first and formost domestically. They must be available for the all Americans that want to make this important transition. I have not been a consumer that makes buying decisions based on brand loyalty. That is what marketers prefer. I purchase the best product I can afford. I do want to see GM succeed with the Volt, as the economic impact and benefits will benefit us all in many ways.

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ed noble Says:
August 6th, 2008 at 5:56 pm

GM is a great stock to trade…All the news good and bad churns the stock…MY plan is to have GM buy me that Volt….I pick up $1000.00 a trade….And by the time 2010 rolls around I`ll have my Volt…Thanks GM….I have no worry of GM going under any time soon

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Carcus Says:
August 6th, 2008 at 6:11 pm

69 Morgan,

May I suggest your read the article I linked on #47 post.

Life in the Slow Lane: Tracking Decades of Automaker Roadblocks to Fuel Economy, (2003)
http://www.ucsusa.org/clean_vehicles/cars_pickups_suvs/life-in-the-slow-lane.html

It may pull you out of your vacuum and serve as a reminder that foreign oil dependence has been a huge sleeping dog with big teeth. We’ve known for decades that we should find something better to play with. GM has been a facilitator in getting us (the short sighted public) into this mess.
I don’t hate GM, I just hate bad decisions, especially when they’re repeated.

P.S. Four of the five cars I’ve owned have been US made, the other is German.

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DonC Says:
August 6th, 2008 at 6:16 pm

#55 MetrologyFirst

I don’t think anyone blames GM for selling cars that people wanted to buy. No issue there. However, GM and the other US automakers went to the mat — and spent many dollars and expended a lot of effort — to do stop the increase in CAFE standards. That’s a different point. Our oil consumption was flat between 1980 and 1990. Then the automakers worked to kill the CAFE standards — Carl Levin and Jessie Helms were the stars — and consumption spiked.

This might also be OK but now the automakers want discounted loans so they can survive the consequences of their own bad decisions. Let there be no doubt that they have really screwed up: their businesses are in the crapper while Honda — which is focused on efficient cars — is the most prosperous manufacturer.

I’m in favor of limited help for the automakers, but we should at least recognize their responsibility for the current set of circumstances. They weren’t helpless victims.

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Morgan Says:
August 6th, 2008 at 6:29 pm

71 Carcus:

Nope, I am not in a vacuum at all. I know all those arguments. GM fought CAFE and was wrong to do so. They have a slight point in that increasing CAFE would have disproportionately cost GM more than any other automaker and, in fact, provided exactly the kind of competitive advantage to the foreign domestics that they enjoy now.

I wasn’t referring to you in the hate department, I should have clarified, there are a substantial number who post here however that actually seem angry at GM without spending the least amount of time pondering the consequences of a US without GM.

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Ada Badda Says:
August 6th, 2008 at 6:33 pm

I will NOt buy vehicles from any distressed companies, whether it is American or Japanese, PERIOD. BTW, My 2009 Toyota Corolla had low-quality interior, maybe Toyota is becoming Japanese GM. Ironically, Chevy Malibu looks so gorgeous, but its reliability has NOT been established, so I have to ignore it when I bought my new car 3 month ago! Sorry, Detroit!

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DonC Says:
August 6th, 2008 at 6:35 pm

As we wait for the CNBC special I ran across this piece which asks the question: is one Volt worth two Priuses? The underlying question of course is: why are GM’s costs so high? Maybe the special will shed some light on this question.

http://wheels.blogs.nytimes.com/2008/07/14/1-volt-or-2-priuses/index.html?partner=rssuserland&emc=rss

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Koz Says:
August 6th, 2008 at 6:41 pm

Bernie Torbik #36
“Why? Apart from the obvious – GM has been technically bankrupt since late 2005 (negative net worth) – Chapter 11 allows a company to reorganize its affairs. It’s not the end of the line, if the opportunity is used wisely. Many airlines have done it, for starters.”

Bankruptcy is an opportunity? Are you kidding? You see this as a means of reciprocity for their past mistakes?

You are decrying GM’s past decisions and recommending they screw over nearly everyone they have obligations to. Chapter 11 Bankruptcy is supposed to be a lifeline for a company that has no alternatives and allows for some means restructuring without everybody losing everything (except the lawyers ). It is NOT supposed to be an opportunity anymore than someone welching on their debts is. If a low interest loan gets them through the day without chapter 11, everybody (including Joe taxpayer) will be MUCH better off. Chapter 11 for GM will cost the taxayer a lot more, not to mention their creditors and others directly associated with their operation.

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Koz Says:
August 6th, 2008 at 6:52 pm

john1701a #62

True!

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Koz Says:
August 6th, 2008 at 6:58 pm

DonC #72

Right on! and perhaps it should be accompanied by a big corporate-wide haircut (union along with execs).

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Bernie Torbik Says:
August 6th, 2008 at 6:59 pm

#76 Koz – Fact: GM is already bankrupt. Chapter 11 is a means by which they can take the necessary actions to ensure their survival beyond the next few quarters, albeit in a greatly reduced, but profitable, size. I don’t see it as “reciprocity”, but as a necessary step if they’re to survive.

Your statement assumes that GM is going to be able to repay its bondholders, honor its labor agreements, and become profitable. Wishing for it to happen won’t make it so. GM has several billion $$ worth of debt obligations coming due in 2008-09 that it has little chance of refinancing. Don’t take my word for it: check the yield on some of the shorter term GM debt, which is selling at a fraction of what its face value is. Clearly, the market doesn’t place long odds on GM’s ability to repay.

If you need further evidence, check out yesterday’s Wall Street Journal report on Cerebus’ inability to have several billion $$ worth of Chrysler’s bank loans extended. If the market doesn’t have any confidence in GM, Ford or Chrysler, why should the taxpayer?

You state that Chapter 11 is for a company with no alternatives. My question to you is: what are GM’s alternatives? FIFTY BILLION dollars of losses in three years, negative net worth of $40+ billion, debt trading at a fraction of its face value. There don’t seem to be many alternatives to me.

I ask again: why should the U.S. or Canadian taxpayer bailout incompetent management, greedy unions and others who have raided the store for fifty years? Anyone now buying GM stock in anticipation of day trading profits or debt is taking his/her chances, and should know better. If they get burned, so be it. Better them than the U.S. taxpayer.

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Rashiid Amul Says:
August 6th, 2008 at 7:00 pm

I have absolutely nothing to say other than I want GM to survive and make the Volt and turn their entire line into EREVs. If they need a loan, okay with me. Personally, we give away too much money to foreign governments and not enough to Americans here at home.

Well, I guess I had something to say after all.
We spent billions of dollars in Iraq for what? We tax payers already got screwed out of that money. If we are going to get screwed again, might as well be by the big 3 and not some other country.

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Carcus Says:
August 6th, 2008 at 7:03 pm

#73 Morgan,

So you’re essentially saying that automotive imports/exports is a 1 way door as far as u.s. manufacturing is concerned. GM/Ford/Chrysler can only sell in the u.s. and have no chance in heck of selling anything in Japan (or europe, etc…). Imported autos, however, can compete and dominate here. And the reason is ???
I suppose you’re going to say unfair taxes on our exports, or can’t compete with foreign government subsidies, or can’t compete with cheap foreign labor. If this is/were true, then THAT is where the high paid lobbyists (and presidential staffers (i.e. Andrew Card)) should have been putting their efforts. THAT is what government is supposed to do for its citizens and businesses in the interest of favorable trade through protective tariffs.

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Just Jeff Says:
August 6th, 2008 at 7:03 pm

In regards to the flap being raised by some over the so called Detroit bailout, it should be remembered that every dollar that the US consumer has to spend on gas is a dollar that isn’t spent on a car.

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Morgan Says:
August 6th, 2008 at 7:13 pm

81 Carcus:

No, because they didn’t have any product they could ship over there that would sell in any numbers.

The small cars shipped over there were more money for less and the large Trucks and SUVs that are GM’s well engineered nice vehicles aren’t exactly the vehicle for those markets. Currency exchange rates have never really been favorable either.
Those are the primary reasons.

Let me ask you….do you think the US is on a fair trading status with other countries with subsidies, taxes on exports and the like?

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DonC Says:
August 6th, 2008 at 7:21 pm

#44 Jackson – “There is a (new!!!) method for using sunlight to chemically split water into hydrogen and oxygen,”

This is doubtless a very exciting development, no question about that. However, as I’m sure you understand, the new development only relates to splitting oxygen from water. It doesn’t make any new breakthroughs relating to sunlight or splitting water in to hydrogen.

The PV panel which provided the electricity has existed for a while. Nothing new here — in fact they could have used an electrical outlet. Splitting the water into hydrogen using platinum as a catalyst is likewise well established and not new. Finally, combining the hydrogen and oxygen is not new. That’s just a basic fuel cell.

The revolution was being able to use cheap catalysts to separate oxygen from water with 100% efficiency at ambient temperatures and ambient pressure. The efficiency, cost of catalysts, normal temperatures, and normal pressures are mind boggling.

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Lurtz Says:
August 6th, 2008 at 7:28 pm

shorter Bernie Torbik:

1) GM declares bankruptcy
2) Employees work for free!!! Yay for America!!!
3) profit!!!!1!1!!1

Your plan is so full of WIN

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Sean Says:
August 6th, 2008 at 7:32 pm

#21

it is not about having the most domestic content or anything like that. (Last time I check GM has the highest domestic content not the big Japan 3). the problem that I Have with helping non-american companies is that it is our tax dollars that pay it not theres. Japan protects there companies from outside companies in there country and helps subsidize the development of projects like the Prius which Japan did for Toyota.

Today a report came out that says that Iraq has a surplus of money from oil of about 79 billion dollars. They have only spent about 7 billion on reconstruction in Iraq while the US has paid about 50 to 100 billion for the reconstruction. I don’t know about you but i would rather that tax money stay here and support OUR AMERICAN companies then those that are abroad that really don’t give a damn about us.

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Bernie Torbik Says:
August 6th, 2008 at 7:49 pm

#85 Lurtz – If GM’s going to survive – a doubtful proposition, at best – they need to become profitable. Chapter 11 is their only recourse. If they can’t reduce their cost structure, they’re done before the middle of 2009. Someone with a lower cost structure can buy the R&D GM has put into the Volt, and put it into production. Either way, GM won’t be around in its current form past the middle of next year.

#86 Sean – I would prefer that no company receive any assistance, but face facts: nearly every state or provincial government attempts to bribe (municipal bonds, property tax forgiveness, outright grants) companies – automotive or otherwise – to make investments for the sake of job creation. Investments made by Japanese, Korean and German companies have been much better, in large part, because their cost structure is lower, they’ve located in the non-union South and they make vehicles the market wants.

I am as appalled as you are about the waste that is the Iraq war and subprime mortgage mess. All the more reason why I don’t want to see any of my tax dollars sent down a rathole at GM, Ford or Chrysler. If the Volt really is as good as it appears to be, someone will make it. If that’s Toyota or Honda, via a pickup of the technology at a bankruptcy auction, fine by me. At least it’ll be well made, and probably, less expensive.

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Carcus Says:
August 6th, 2008 at 8:09 pm

83 Morgan,

“Currency exchange rates have never really been favorable either.”

As far as u.s. exports go, the exchange rate hasn’t been this good for foreign buyers in a long time (maybe ever). The U.S. greenback has tanked to the tune of 30%+ over the past 5 years.

“Let me ask you….do you think the US is on a fair trading status with other countries with subsidies, taxes on exports and the like?”

That’s a huge question. You could spend your life trying to answer that one, but . . . .

Here’s a recent article that shows u.s. automotive exports are on the rise

http://midwest.chicagofedblogs.org/archives/2008/07/auto_exportskli.html

My point is, I just don’t believe that the u.s. absolutely cannot compete against imports and can’t export either because
a. Japan’s population supports R&D of the types of autos that are exportable and the US population won’t.
b. The U.S. manufacturers can’t produce a product that will sell “over there”
c., d. e. f. etc…. ad infinitum
If that were true, then we might as well either close the borders or stick a fork in it.

However, if I had to pick what I consider to be the biggest handicap, it’s paying for retirees pensions and healthcare, as the “chairman” spoke about at length in his “letter”

(too bad, looks like that post got yanked, it was a good one)

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Iraq Cost Says:
August 6th, 2008 at 8:09 pm

#86 Sean

I think that Iraq is trying to save as much money as possible so they can clean up the mess we leave behind. The U.S. needs to spend at least another $200 billion in Iraq just to remove our bases and support infrastructure. We cannot afford to bailout Auto companies when we have important missions overseas. There is only so much money to go around. Iraq will need all their money when we leave so we must not force them to use their own money at this time. You have to see the BIG picture here. GM can handle their own problems.

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RB Says:
August 6th, 2008 at 8:15 pm

In the first 15 minutes, the main point was Mr. Lutz saying that GM quality is back, for Chevy and for Cadillac.

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Morgan Says:
August 6th, 2008 at 8:18 pm

huh…it is sort of hard to remember that just in 1996 China was nowhere near the consumer market that it is today

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Support Our Troops Says:
August 6th, 2008 at 8:21 pm

I would much rather see that $40 billion go to pay raises for our American soldiers putting their lives on the line. Our defense budget is less than a trillion dollars, this is not enough to support our global mission. Spending money to bailout corporate america is a waste. We need all government appropriations to be going to National Defense. We are at war people, I know many of you are in denial, but this is going to be a long and co$tly war. The next President will need to raise another $500 billion just for our Middle East adventures. We do not have the funds to help GM at this time in history.

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RB Says:
August 6th, 2008 at 8:24 pm

The main point of the next 8 minutes was that GM and Rick Wagoner made a farsighted investment in China in 1996 with results that now are very successful for Buick, Chevy, and Cadillac.

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Carcus Says:
August 6th, 2008 at 8:25 pm

To be clear.

I would like to see GM survive. I would love to see the volt produced, affordable and in large volumes, but I would hate to see another government bailout.

#87 Torbik may have the painful prediction correct: Chapter 11 and dump the retiree benefits, just like the airlines did.

I don’t want to see the retirees lose their benefits. But I don’t want to pay for them, either.

Maybe there’s a compromise solution in there somewhere.

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GM Jihad Says:
August 6th, 2008 at 8:28 pm

The muslim brotherhood needs $40 billion more than GM does. This is about priorities. America is a world power and we expect help from our American friends. I think GM has stockholders that can give them money. The U.S. government dollars are wisely spent to help muslims create a better world to live in. America has global obligations that must be met and should not be involved in private corporation funding.

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Halliburton Says:
August 6th, 2008 at 8:33 pm

I think Halliburton Corporation should be granted $40 billion for helping to win the war in Iraq. The brave men and women at Halliburton have done a great service and should be rewarded appropriately.

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RB Says:
August 6th, 2008 at 8:35 pm

The next 10 minutes was about Dale Earnhardt Jr, the new Camaro, and its designer.

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GM Reborn Says:
August 6th, 2008 at 8:39 pm

I think GM should go bankrupt. They would emerge a leaner meaner company and better able to compete. I think the only reason they won’t is because current leadership (if you can call it that) doesn’t want to cede control. Since when you file for bankruptcy, the current management is screwed in the decision making processes. It’s all about power and control.

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Frankie Says:
August 6th, 2008 at 8:40 pm

http://www.cnbc.com/id/15840232?video=807139236

Is this the video? Can’t watch it at work….

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RB Says:
August 6th, 2008 at 8:46 pm

The next 10 minutes was on GM’s bottom line and Mr Wagoner, who said that over the last 10 years things had changed tremendously. Done with a light touch.

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Ernie V Says:
August 6th, 2008 at 8:49 pm

saving general motors OR saving general public …from extra money from bailout ?

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RB Says:
August 6th, 2008 at 8:56 pm

The final10 minutes on the Volt concept and the Volt’s importance. There were a few video’s of Mr Lutz getting into and out of the Mule.
A price of $45K was mentioned. Nothing new here that I saw.

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RB Says:
August 6th, 2008 at 8:57 pm

In between segments were some GM commercials from years gone by. I enjoyed those — fun to watch and good reminders.

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RB Says:
August 6th, 2008 at 9:01 pm

Overall the program was a good summary of points already known by Volt Nation, done with some good video especially of China and the Camaro.

One might have come away wondering how a company with so many products that are new and successful all around the world could possibly be in financial distress That part was not explained.

The Volt was presented in a postive and promising way but if anything new was presented, I failed to detect it. That’s ok — for the general audience it made informative points.

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Lyle Says:
August 6th, 2008 at 9:02 pm

Overall kind of a neutral message I thought. Kind of wait and see, a lot of nervous tension though.

Its amazing the access that Phil LeBeau got..he even got to drive the Volt mule.

Nothing new except the 15K battery price quote, don’t know if that was confirmed by GM.

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tBay Says:
August 6th, 2008 at 9:02 pm

well that was a nice enjoyable bit about GM.

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Statik Says:
August 6th, 2008 at 9:05 pm

Yeah, I watched it myself. A little disappointing, they practically showed 90% of it in previews throughout the day.

#1 Statik
“From watching the commercials and 5 minute ‘teaser segments’, it looks to be about 30 mins of GM-business related info, a good 15-20 minutes on the Camario (obviously since they have a Dale Jr. segment) and hopfully a solid 5-10 minutes on the Volt”

Seems about right.

I don’t think we really learned anything here, but I guess that is to be expected, a good portion of that show has been ‘in the can’ for several months…and we seem to be ‘up to the second’ for updates here on the site.

Side note: I had to fight for control of the TV over “So You Think You Can Dance,” for the record I’m going to take Joshua as the winner, lol.

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George K Says:
August 6th, 2008 at 9:10 pm

It was a good summary of GM. As Statik said, I don’t think Volt fans learned a lot about the Volt program, anyway. I do wish they has spent more time on the Volt. But, I was surprised at them mentioning the $40’s price and $15k battery. Last I heard was $10k for the battery. I was hoping for a car price somewhere in the $30’s. Actually I still am.

Lutz’s test drive went pretty well. Didn’t come out as exciting as I thought it should have. Aside, I wonder why Lyle hasn’t had his drive yet?.

It seemed the show started off more positive with the international market, and then even with the Volt at the end, came across as a bit of a downer.

I know it could have been much more negative, and was actually more fair and balanced then I was expecting.

All in all, I thought it was positive for GM, but with not enough emphasis on what a breakthru the Volt / E-Flex is / going to be!

Wonder why my avatar didn’t show?

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Ernie V Says:
August 6th, 2008 at 9:14 pm

after watching the cnbc docu , the gm volt has another name …the gm silver bullet ! bob lutz said so !

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Statik Says:
August 6th, 2008 at 9:15 pm

#105 Lyle

“Its amazing the access that Phil LeBeau got..he even got to drive the Volt mule.”

Woohoo, Lyle. Into the threads tonight.

I think the access that Phil LeBeau got has a direct relation to the fact that CNBC is owned by GE…and of course the Volt is ‘chalk full of cutting edge GE products’ (as per Bob Lutz during his big unveiling speech for the Volt last year).

That relationship (GE owning CNBC) may have also tainted the bias of the program somewhat…and also the fact that CNBC’s revenue stream from the constant running of Cadillac commercials all day long between business news has to be massive. Although I did not notice it too much overall.

I guess the bias perhaps shows itself in the amount of negative energy that wasn’t shown that potentially could have been…or in the concept of the program in itself, the title was “Saving GM” after all, lol.

Overall Rating:
3 lightning bolts out of 5
Enjoyable, light fair…kind of like the old GM commercials they showed.

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Arch Says:
August 6th, 2008 at 9:24 pm

People do not understand the Volt yet. It will take a long time for that to happen. When we were building my version of the Volt back in 1974 the dean of the school of engineering got it killed. It still sits in my back 40.

Take Care
Arch

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Jackson Says:
August 6th, 2008 at 9:30 pm

Frankly, I found the show discouraging. GM still thinks that all it has to do is can trucks, build better quality luxury cars and … a muscle car? A Pony Car?! The numbers on any Camaro wouldn’t have been meaningful in themselves; there’s only so much market for such. The value was the panache that it added to the rest of the line. I submit that in these days of ever increasing oil cost, the muscle car is irrelevent, and adds something … other than panache … to the rest of the line. All that effort and money for a new version of something Ford invented in the mid-sixties, so that GM can catch up to … Chrysler? There won’t be a Chrysler in ten years!

So, if they do the things listed above, the Volt is something they can ease into with limited numbers. And I hadn’t heard that $45K estimate, I thought $40K was the ‘new’ target, and maybe some government rebates like they offered for the Prius. Looks like even $7000 is going to be a flash in the pan.

The Volt for anyone not the officer of a company is starting to show similar chances as EEStor being real.

Someone will do it. Someone will fulfill the initial promise of the Volt. But not for a long, long time.

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Jackson Says:
August 6th, 2008 at 9:33 pm

Arch, did your car use lead-acid batteries and the auxiliary turbine generator from an airliner?

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Morgan Says:
August 6th, 2008 at 9:36 pm

110 Statik:

Now there is an interesting connection. General Electric.

They could purchase GM right now with pocket change and they are the leaders in just about any type of electric motor drive train and have been for years on power generation.

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Jackson Says:
August 6th, 2008 at 9:45 pm

DonC (#84):

I realize that a system such as the one you describe has been developed, and your points against it are valid.

Uh, unless I read the story I linked wrong (short as it is), it refers to some method of using sunlight without PV cells. Also, if you split Oxygen from water, don’t you get Hydrogen?

There wasn’t a lot of detail in the blurb I saw, so if this is, in fact, that same system, then yes; we’re still waiting for a way to use sunlight and chemistry directly without PV cells.

As to fuel cells, did you happen to see this link I posted in a recent thread?

http://gizmodo.com/5032327/much-cheaper-fuel-cells-on-the-way-with-new-prototype

The gist: someone has made a fuel cell without platinum … it uses a form of conductive plastic instead. Cost: hundreds, not thousands.

I’m not a fuel-cell fanboy. But these two items (announced this week), has forced me to downgrade my estimate of the time remaining before hydrogen for automobiles is practical from 50 years to 20 years. There’s still the important matter of practically storing the hydrogen on-board to sort out.

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Ryan P Says:
August 6th, 2008 at 10:00 pm

#113 Jackson:
“Arch, did your car use lead-acid batteries and the auxiliary turbine generator from an airliner?”

I don’t know about Arch, but MINE was a starter/generator from jet bolted to the transmission of a British Austin Marina and a hand-soldered controller, with 18 six volt golf cart batteries… in 1981 !
I sold it to a member of the SEVA (Seattle Electric Vehicle Assoc) when I lost my job.

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Sean Says:
August 6th, 2008 at 10:01 pm

First of all I want to say that our troops are great to us and what i was really trying to put forth in my comment was that we need to invest in our own country first. The world expects us to bail them out of hard times and now that we need the help we don’t seem to be able to help ourselves. I would rather the money that we have here stay here and take of ourselves before we start giving to the rest of the world. I understand that we have an obligation to help out but let make sure that we can take care of ourselves first.

Have a good night and please pray for our troops to come home and safely.

thank you.

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Cautious Fan Says:
August 6th, 2008 at 10:06 pm

#66 Morgan

Actually I agree with you. Gov’t subsidies would be more efficiently spent if they didn’t take it from the people in the first place. I don’t blame GM for asking for money, who wouldn’t want below market loans. But I don’t think its efficient for the gov’t to try and manipulate me to do certain things by giving me my own money back. I should be able to decide for myself, as should you and everyone else. Usually subsidies just turn into giveaways. They are not an efficient way of doing things.

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Lurtz Says:
August 6th, 2008 at 10:08 pm

I happen to think GM’s retiree and healthcare obligations are a huge deadweight to the bottom line. General Motors *was* the largest employer in the country, after all – but now they’re fulfilling those obligations as a much smaller company.

But callously flinging those retirees and current workers’ healthcare needs into the libertarian maw isn’t the answer. GM and American corporations had a social contract with Americans: Do good work for us, we’ll take care of you. As long as you had a job, you would be taken care of. That was the deal. We rejected European socialism in favor of employers taking care of their employees.

America has slowly moved away from that, as well as seeing union membership decline to all-time lows. We now have defined-contribution retirement plans instead of defined-benefit plans. Employees bear more of the burden of healthcare costs. But as a shrinking corporation, GM still has retiree and healthcare burdens that don’t shrink (accounting schemes aside). If GM were a perpetually growing company it wouldn’t have these difficulties.

I think we both agree that GM would be a lot more solvent if it “got out of the retiree and healthcare business”. In fact, none of it’s international competitors pay for retirement or employee healthcare: Those are paid by their respective governments. GM has said as much as, too.

I’m for getting American corporations out of the retiree and healthcare business — let’s adopt the European model, and let our companies eliminate that liability from their balance sheets. Because the middle road – dumping retirees on the curb, and ending all healthcare benefits – is only fitting for a third-world country and would be to the detriment of us all.

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Ryan P Says:
August 6th, 2008 at 10:08 pm

OK, I watched the program on CNBC and was not impressed. Why? This is what I heard: “Whoo Hoo! look at us! We’re on our way back into the forefront… with the new CAMARO MUSCLECAR!”
Dale Earnhardt Jr: “She sure has a sweet V-8 !”

Well, You can’t go home again. – Dylan Thomas

R. Wagoner: “Sales to the Chinese are gonna be our saviour… if the Japanese don’t beat us to it”
Rick, at the snails pace you’re moving at now, the Japanese are gonna whup yo @$$.

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Grizzly Says:
August 6th, 2008 at 10:25 pm

All in all not a bad presentation. Thanks for the heads up Tag….I believe it was Tag…anyway by way of the fact that it was CNBC I actually had low expectations, but I was pleasantly surprised. It was reasonably balanced and fair.

I just wish they had a better shot from the inside of the mule on the acceleration, but hopefully soon we’ll get a better look.

Again, not a bad episode at all.

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ghost Says:
August 6th, 2008 at 10:27 pm

Who is actually surprised?
Didn’t we learn a single thing from the 70’s gas crunch?

Sure – it’s good to make a 425hp 6.1 L challenger –
Sure it’s great to have a new Camaro – mustang, you name it –

but why don’t they have anything fuel efficient and reliable? Are you telling me that this current gas crunch is a surprise to anyone?
I have been driving for over 10 years now, and gas has consistently raised year by year.

Why is this a surprise?

Had GM offered anything that gets a REAL 40mpg U.S ( not these laughable IMPERIAL MPG’s that are even over-rated ) I would have bought a new car from them.

If they offered the new Malibu with the fuel efficnet 6 Speed Auto in the BASE model, where it would be affordable – I would have bought one…

Give your heads a shake.

They have ULTRA fuel efficient cars in Europe – developed by these very companies here.

It’s as if they don’t want to succeed.

One poor idea and pricing idea ( to get you to buy top model ) after another.

I pray for the volt.

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Arch Says:
August 6th, 2008 at 10:30 pm

Jackson

No we used a generator from an old C47 that was worked on by Briggs and Stratton as a motor. Yes we were useing lead acid batteries. We never had a chance of making it.

Take Care
Arch

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Grizzly Says:
August 6th, 2008 at 10:42 pm

Bernie T #8

“When (not if) GM does go into Chapter 11, it will free itself from two huge taxes: union labor contracts, and the stranglehold its $4 billion of annual interest payments have placed on the company. It will also be forced to rationalize its bloated management and corporate structure, eliminate redundant brands and focus on operational efficiencies. We should hope Chapter 11 happens ASAP!”

*** *** ***

Bernie,

Stick to writing CEO fiction. You’re out of your league. It’s just too simple to outline silly plans like shedding 3-4 brands overnight as a solution to much broader problems. I won’t go into labor contracts or all of your previous pixilated manure, but suffice it to say you’re a donkey and I’ve got a tail with a pin in it.

If anyone thinks I’ve been harsh I’ve got to say that this poster’s series is very close to P.D.F_ _……… !

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stopcrazypp Says:
August 6th, 2008 at 11:19 pm

#115 Jackson
Actually the story is referring to a new way of electrolysis that is cheaper than the ones we have right now, so it still uses PV panels, but it doesn’t really present that much of a revolution IMHO b/c it doesn’t solve the expensive costs of storing and using the hydrogen (ie. the high costs of the fuel cell and storage tank). I have heard of companies that estimate they can make a home electrolysis system to produce hydrogen for $4k if mass produced using existing technology, so the electrolysis system isn’t really that bad in terms of cost (ie. compared to the solar panel cost and the other mentioned costs).

The platinum-free fuel cell on the other hand is a lot more important news for fuel cells. It has also changed my estimate for hydrogen viability. But the $3.5k-$4k cost of platinum reduced to hundreds still doesn’t seem to cover the whole cost. A recent article said: “Mr. Fukui added that in response to this, Honda will be releasing a third model of its fuel-cell model the FCX Clarity, and will come with a tag price of tens of millions of yen – an amount far less than the few-hundred-million-yen priced models currently in the market.”
Tens of millions of yen means 100,000s, and few hundred million yen is in the millions. So the high cost of fuel cell vehicles is not just because of a couple thousand dollars of platinum, there’s other parts that cost a lot too.
http://www.allheadlinenews.com/articles/7011297605

But anyways that kind of development is good news for fuel cells and I welcome it as long as automakers don’t use it as an excuse to delay making the PHEVs & EVs they plan to make (we’ve seen this happen before), b/c I still don’t see hydrogen cars being viable in the near future if for infrastructure and current cost alone, esp compared to PHEVs & EVs. About 20 years is right.

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DonC Says:
August 6th, 2008 at 11:21 pm

#115 Jackson – “Uh, unless I read the story I linked wrong (short as it is), it refers to some method of using sunlight without PV cells. Also, if you split Oxygen from water, don’t you get Hydrogen?”

Separating oxygen from water gives you a proton. To get hydrogen you need to add an electron. (Sort of the reverse of a fuel cell where you split off the electron, use it, and then add it back to the oxygen and the proton to get water). The longer description went like this:

“They dissolved cobalt and phosphate in water and then zapped it with electricity through an electrode. The cobalt and phosphate form a thin-film catalyst around the electrode that then use electrons from the electrode to split the oxygen from water. The oxygen bubbles to the surface, leaving a proton behind. A few inches away, another catalyst, platinum, helps that bare proton become hydrogen. (This second reaction is a well-known one, and not part of Nocera and Kanan’s study.)”

The sunlight wasn’t involved at all in the experiment. It’s the direction in which the researchers think we should go. This is a pretty good summary of where we are on this:

Nocera’s discovery is still a science experiment. It needs plenty of engineering before it can be a useful device. The cobalt and phosphate at the center of Nocera’s work is cheap and plentiful, but the hydrogen reaction uses platinum, which is rare and expensive. The electrode needs to be improved so the oxygen-making process can speed up. And the system needs to be integrated into some kind of electricity-producing device, ideally powered by solar or wind on one end and a fuel cell on the other.”

Not commercial but really amazing stuff.

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Grizzly Says:
August 6th, 2008 at 11:31 pm

One of the most interesting things I took from this program WRT the changes at GM was what Max Bob had to say about GM’s product development.

I don’t have the exact words, but he stated that GM used to spend millions on market research that ended in development of vehicles like the Aztek. I agree with his assessment that commonsense decisions by knowledgeable people who know what consumers want could save millions and net winning vehicles. If you look at the last several auto magazine awards, I think it’s clear that he’s right. I have no doubt this played heavily into convincing the board to move forward with the Volt. With pump prices at about $4/gal, I don’t think anyone would argue that maybe market research WRT winning auto designs is a thing of the past.

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DonC Says:
August 6th, 2008 at 11:43 pm

#115 stopcrazypp

You’re missing the importance of the “synthetic photosynthesis”. They’re talking about using electricity, water, and some catalysts to make hydrogen and oxygen at ambient temperatures, standard pressures, and 100% efficiency. This is revolutionary, which is why the photosynthesis was the lead article and the polymer replacement for the platinum a secondary article (they appeared in the same magazine).

FWIW the researchers don’t think using fuel cells for transportation is a good idea. They like the idea of electric cars. They start from the fact that the amount of sunlight hitting the earth in a few hours contains more energy than the entire world uses in a year. To them the challenge is how to harness this energy. Turning sunlight into electrical power is pretty straightforward and, with new technologies coming on line even now, that process is more than cost effective with all other forms of electrical generation.

The problem is, as it always is with electricity, how do you store the stuff? They’re offering a path for a closed system which can store the electrical energy — as hydrogen and oxygen — that you have made from a renewable source. In their minds this would be solar because it’s so abundant. In their example, a person would have a PV panel which generated electricity during the day. That electricity would be stored as hydrogen and oxygen. When the person came home at night they would plug in their car (Volt) and then use a fuel cell to create the electricity to charge the Volt’s battery.

You could of course deploy this on a large scale at thermal solar or wind farms.

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Bernie Torbik Says:
August 6th, 2008 at 11:44 pm

#124 – Grizzly

Reread the post. Nowhere is it suggested that 4 brands be shed “overnight”, but you appear to be unable to comprehend most of what was written.

I don’t know if your bliss is ignorance, or ignorance bliss. I’ll consider the source and disregard your remarks accordingly.

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JonP Says:
August 6th, 2008 at 11:46 pm

Bernie Torbik,

So send all the retirees, and creditors to the slaughter. That’s a great solution

I bet you think unemployment insurance, and federal stafford loans for college kids are a waste to.

IF GM has to go chapter 11. IF …….

I would like to believe as an American that they tried every possible option and stuck it out to the last dollar before they did.
Not used it as a golden parachute buisness strategy as you propose.

I hope your local town decides it would get better tax income if they took your land under eminent domain and made it a toyota dealership.

I find your suggested buisness practices to be offensive to American principles.

Statik,
I have appreciated your stark observations of GM’s buisness as a good balance to the mass of GM lovers here. I have thought in the past that you were only being a realist, based on GM’s actual numbers, and not your love for the Volt. After reading your support for Bernie’s buisness suggestions for GM i’m not so sure.

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Bernie Torbik Says:
August 7th, 2008 at 12:16 am

#130 JonP – It’s unfortunate that you don’t understand the point of what I’ve proposed. It is the ONLY strategy that offers GM a chance of avoiding total collapse. I didn’t create the situation – blame decades of mismanagement, greed and incompetence.

Regarding sticking it out to the last dollar, I’d say GM has done that – to the tune of $50 BILLION of losses over the past three years, negative equity in excess of $40 BILLION, and debt that matures in 1-2 years is valued at ~ 60 or so cents on the dollar. Personally, I don’t want to flush any of my tax dollars down a rathole.

My view on UI or Federal Stafford Loans are off topic, but if you must know, I’d prefer that both be privatized, along with most government programs.

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CBK Says:
August 7th, 2008 at 1:05 am

This whole thing has gotten out of hand.

I just want to see if my gravatar works…

Wahoo, it does and hot damn it’s a crappy American made GM product called
a 2006 Corvette. By the way, it gets better mpg than most of the vehicles
others drive today…

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stopcrazypp Says:
August 7th, 2008 at 1:09 am

#126 DonC
The problem with that is even given 100% electrolysis (actually I don’t think they ever said it was 100% efficient, just that it’s cheap, can operate in benign conditions, and is “highly efficient”), the fuel cell efficiency is still ~60%. If the fuel cell / hydrogen storage costs remain at $100,000s-millions mark then the 100% electrolysis won’t matter because home owners will never be able to afford installing such a electricity generating system or buying a hydrogen car even if you gave the electrolysis unit to them for free. Not that it’s a small discovery scientifically, just that in terms of helping hydrogen viability, I don’t feel it is as important as making fuel cells more affordable. I say this only because I know home electrolysis systems can be made for much less than the cost of a typical solar panel array, for $4000 as I said: http://www.autobloggreen.com/2008/07/10/itm-power-now-has-a-demonstration-house-with-home-hydrogen-stati/

Large battery arrays are being experimented with, which are obviously a lot more efficient that 60%, given batteries tend to be around 80% efficient. This is made possible because we have battery chemistries that can last up to 20 years now, which means there is likely a return in investment, unlike previous lead-acid battery arrays which lasted only a couple of years.

http://www.autobloggreen.com/2008/07/11/altairnano-2mw-battery-passes-tests-could-help-green-the-grid/

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JonP Says:
August 7th, 2008 at 1:25 am

Bernie,

“Personally, I don’t want to flush any of my tax dollars down a rathole.”

You say that as if a GM bailout would be the worst of our ridiculos federal tax expenditures. Not to mention none of our taxes go to anything but paying the interest on the federal debt. I’m not big on goverment bailouts either, but this would be good for america. Alot better for our economy than say foreign wars that don’t affect our national security, or handouts to every other country in the world in some form of aid so they play economical ball with us. Even saving lenders who are in trouble because they were giving mortgages to anyone who would sign. But the thing that all of those ridiculos federal expenditures have in common is…….
Their good for our economy!

I’m all for limited goverment, I voted for Ron Paul, but your disposition on federal spending is a little radical.

Personally i don’t blame decades of greed, mismanagement, and incompetence. (well a little incompetence but probably better described as foresight)
I blame it on not taking or negotioating a better situation as far as UAW pension & benefits.( but unions are something corporations have to deal with in america, as opposed to japan)
Inability to change fast enough to meet the demand of the evolving car market.(honestly though was that possible, 5 years ago everyone wanted a hummer/excurrsion/escalade….)
Most importantly of all though complacent in quality, technology, and boldness. (though in my experience being the best or largest at anything usually leads to complacency)

In one of your earlier post you made mention to why would GM do anything different with this money than they have in the past.
My answer is because they have woken up from their slumber by the noise of extinction, they realise now that Japanese automakers pose a serious threat to them, they realise that gas guzzelers are not the final solution, they realise that to be a part of the future auto industry they need to have a level playing field with the japanese when it comes to salaries/pension/benefits. They realise putting out crappy cars dosen’t work anymore.

I mean we are still talking about arguably the worlds largest automaker right. You act like were talking about Chrysler. They just recently gave the UAW what 34 billon dollars, and still have 40 Billion in liquid. I’m aware of their large quarterly losses believe me Statik keeps us all up to date on those, but large lump sums have been for non-recurring charges. Yes sales are down but thats across the board in the US, they have a huge market share in China, the Malibu, and Pontiac G6 are doing very well here, Cadillac is on the rise…….

Honestly if your against bailouts for any reason fine, you have a right to your opinion as an american citizen. The part that offends me is the way you present bankruptcy as if its the best option and not last resort. Where i come from you fight to the last man, you go down with the ship, you hold the line, etc………

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Joe OBrien Says:
August 7th, 2008 at 1:29 am

I just hope these 30-40 billion in loans don’t go towards designing the next Escalade, or Camaro. Or another corvette, when they are mainly needed for development of fuel effeciant, or fuel free vehicles for daily use.

Just hope the money isn’t squandered on a luxury SUV or another 500HP sports car instead of next gen vehicles that shy away from oil.

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DaveP Says:
August 7th, 2008 at 2:09 am

#31 Gsned57, #35 Morgan:

Actually, M1EK is more right than not. The data is clear. SUV type vehicles were definitely popular amongst people who wanted SUV type vehicles, but were absolutely NOT popular amongst the general public before the 90’s:
From the US office of transportation technologies report:
http://www-cta.ornl.gov/cta/Publications/Reports/ORNL_TM_2000_147.pdf
“During the 1990s, sport utility vehicles (SUVs) became the fastest growing segment of the auto industry, especially those in the medium-size category. In 1999, SUV sales reached almost 19% of the total light vehicle market and the mix of SUVs on the road, as measured by registration data, was about 8.7%”

By 2004, SUVs alone accounted for 27.2% of light duty vehicle sales. When added with trucks, the sales are greater than cars.

However, the rise of the SUV as car wasn’t entirely the fault of the car companies. Americans like powerful engines and the CAFE standards basically prevented those from being put into cars. So, trucks were an option, being pretty much exempt from CAFE, so it didn’t take much to convince people to buy “cars” with powerful engines, even if those cars were actually trucks. As an added benefit for the car companies, the trucks didn’t have to meet those pesky safety standards, either. Plus, don’t forget the incredibly generous government tax credits for trucks!:
‘Back in 1996, in an effort to change tax laws “to encourage business investment,” Congress made it possible for business owners to claim $17,500 in accelerated depreciation on equipment (such as trucks). That amount increased in ‘01, ‘02, and ‘03 from $20,000 to $24,000 to $25,000, respectively. Now, Bush’s plan calls for up to $75,000 “‘
http://4wheeldrive.about.com/cs/drivingtipssafety/a/aa041603a.htm

But back to the safety. I hope there is a special place in Hell reserved for those people who knew that SUVs were not only more dangerous for their drivers but for everyone else on the road yet continued to perpetuate the false notion that somehow SUVs were safer (It’ll be right next to the tobacco people saying the same kinds of things). And SUVs are STILL getting less safe for their drivers (I’ve been over this before:
http://gm-volt.com/2008/06/04/who-killed-the-hummer/
the data is clear there as well:
http://tinyurl.com/5uwfhy

You may know from my posts I’m certainly not arguing for motor scooters. Far from it, I like very, very fast cars. And I’m not arguing that someone should not buy an SUV either if that’s what they really want. What I am arguing for is for everyone to stop lying about them and to tell Mom & Pop America the truth that they and their families are (at this time) 11% more likely to be killed in an accident by their SUV than if they were in a car and even more likely to kill someone else in a car with their SUV and then see if that was REALLY what they wanted or thought they were buying. I think most families would even today still be truly surprised and would probably just settle for the minivan or station wagon as they did before they started buying SUVs merely as car replacements if they knew that particular inconvenient truth.

In this as in other things, people deserve the accurate data.
In the general case, Democracy demands it.

Hmm, actually, another thing I want is to transfer that big fat tax break off SUVs and onto the \Volt. Shoot, I’ll have to start a company. Anybody want to pay me for ranting on forums? I could do that.

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DaveP Says:
August 7th, 2008 at 2:14 am

Sigh. Another try on my post:

#31 Gsned57, #35 Morgan:

Actually, M1EK is more right than not. The data is clear. SUV type vehicles were definitely popular amongst people who wanted SUV type vehicles, but were absolutely NOT popular amongst the general public before the 90’s:
From the US office of transportation technologies report:
http://tinyurl.com/567vz3
“During the 1990s, sport utility vehicles (SUVs) became the fastest growing segment of the auto industry, especially those in the medium-size category. In 1999, SUV sales reached almost 19% of the total light vehicle market and the mix of SUVs on the road, as measured by registration data, was about 8.7%”

By 2004, SUVs alone accounted for 27.2% of light duty vehicle sales. When added with trucks, the sales are greater than cars.

However, the rise of the SUV as car wasn’t entirely the fault of the car companies. Americans like powerful engines and the CAFE standards basically prevented those from being put into cars. So, trucks were an option, being pretty much exempt from CAFE, so it didn’t take much to convince people to buy “cars” with powerful engines, even if those cars were actually trucks. As an added benefit for the car companies, the trucks didn’t have to meet those pesky safety standards, either. Plus, don’t forget the incredibly generous government tax credits for trucks!:
‘Back in 1996, in an effort to change tax laws “to encourage business investment,” Congress made it possible for business owners to claim $17,500 in accelerated depreciation on equipment (such as trucks). That amount increased in ‘01, ‘02, and ‘03 from $20,000 to $24,000 to $25,000, respectively. Now, Bush’s plan calls for up to $75,000 “‘
http://tinyurl.com/66uswk

But back to the safety. I hope there is a special place in Hell reserved for those people who knew that SUVs were not only more dangerous for their drivers but for everyone else on the road yet continued to perpetuate the false notion that somehow SUVs were safer (It’ll be right next to the tobacco people saying the same kinds of things). And SUVs are STILL getting less safe for their drivers (I’ve been over this before:
http://gm-volt.com/2008/06/04/who-killed-the-hummer/
the data is clear there as well:
http://tinyurl.com/5uwfhy

You may know from my posts I’m certainly not arguing for motor scooters. Far from it, I like very, very fast cars. And I’m not arguing that someone should not buy an SUV either if that’s what they really want. What I am arguing for is for everyone to stop lying about them and to tell Mom & Pop America the truth that they and their families are (at this time) 11% more likely to be killed in an accident by their SUV than if they were in a car and even more likely to kill someone else in a car with their SUV and then see if that was REALLY what they wanted or thought they were buying. I think most families would even today still be truly surprised and would probably just settle for the minivan or station wagon as they did before they started buying SUVs merely as car replacements if they knew that particular inconvenient truth.

In this as in other things, people deserve the accurate data.
In the general case, Democracy demands it.

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ausmartin Says:
August 7th, 2008 at 3:40 am

The rate the cash is being burned up the big three is absolutley amasing.
Looks like bankruptcy – But they better NOT.
Ie: would you buy a new car from a bankrupt car maker – not this monkey and if so it would have to be way CHEAP and the situation would be WORSE.

Question If they got cheap cash loans, why wouldn’t their compeditors who also manufacture in the US be eligible for the same deal. They all have local head offices.

Fair deal for all – otherwise it’s going to looked rigged real bad.

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Gsned57 Says:
August 7th, 2008 at 5:47 am

136 DaveP,

It has never been a secret that SUV’s are less safe. Everyone knows and has known that they are more likely to roll over and therefor less safe. I just can’t see the logic in blaming the auto industry for putting a product out that people want to buy. I’m sticking with my opinion that M1EK is completely off base.

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Rashiid Amul Says:
August 7th, 2008 at 5:51 am

#95 GM Jihad GM Jihad Says:
The muslim brotherhood needs $40 billion more than GM does. This is about priorities. America is a world power and we expect help from our American friends. I think GM has stockholders that can give them money. The U.S. government dollars are wisely spent to help muslims create a better world to live in. America has global obligations that must be met and should not be involved in private corporation funding.

—-

I strongly disagree with this. The USA is not the world’s police.
If Muslims want a better life, they should have their own revolution.

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BillR Says:
August 7th, 2008 at 6:55 am

Caught the last half hour of the show. Also thought it was fair.

One amazing fact that I liked, GM has manufactured 450 million vehicles in its 100 year history, and no other manufacturer comes close.

As far as GM’s troubles, they essentially can be mostly attributed to the rapid escalation of oil prices. If gas still sold for $1.25 per gallon, GM would be profitable and trucks and SUV’s would still be flying off the lots. And why? Because people like them. GM didn’t force people to buy these vehicles, they only made a great product that was affordable. Why do you think all the foreign manufacturers like Audi, Nissan, Mercedes, and others got into the SUV market? So they could “force” consumers to buy them? Get real!

Although this may not be popular, I am in favor of loans to the Big 3 to revive the industry. Granted there may have been some mismanagement, high cost benefit packages for the UAW, and other financial drains, but let’s also consider the unfair situation that the US manufacturers are in.

For instance, the EU nations may provide up to $15 billion in low cost loans to Airbus for development of the A350, a plane they desperately need to compete with Boeing’s new 787. Does Boeing have access to this type of money? No. So there we have the unfair practice where governments help their own industries.

Japan is notorious for for its protectionism. Maybe its time we return the favor. And of course, Japan’s gov’t. also provides subsidies to its industry (like for battery development).

So, the ideas of free trade are wonderful, but unfortunately it isn’t an accepted practice in the global community. If we need to provide loans to the Big 3 to help them survive this sudden shift in product sales, then I for one am in favor of it.

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hermant Says:
August 7th, 2008 at 7:03 am

I just watched the entire show on the DVR. I’ve always felt that Phil LeBeau has done a pretty fair job in his journalistic pursuits. He’s one of the few CNBC hosts that really tries to keep his politics out of his professional life. Most of them are bleeding heart liberals making no effort whatsoever to hide their Democratic party stripes. Good job Phil.

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Schmeltz Says:
August 7th, 2008 at 7:21 am

I caught the show last night. I can’t say I personally learned anything new really. We here are sort of spoiled though since we get most of this Automotive news almost literally up to the minute; that’s not an insult Lyle by the way, that’s a compliment! I think the show was good for most other people that know the basics of the difficulties going on with GM, and this offered more of an in depth look.

Some points about the show: I wished for more discussion and a look at the Volt. Overall a good balanced look at the Company, and the show tried to stay more on the positive side than the negative. It could have been a scathing piece. I’m glad that it wasn’t. 3 stars out of 5.

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Morgan Says:
August 7th, 2008 at 7:22 am

136 Dave P:

Another try on my post.

Remove yourself from the term SUV and just think “Large Vehicle”

Before SUVs it was Vans and Minivans, before those it was station wagons, and before THOSE it was land yachts and muscle cars.

America has always loved a big car. The “ridiculous” tax credits, and I agree they were pretty outrageous. Was to pump the economy back up after the dual shocks of the tech bubble crashing and 9/11. Rightly so, our government chose a specific tax credit that would heavily favor domestic manufacturer’s so the government money, and our tax dollars, stayed in the US instead of going into the coffers overseas when the profit washed out. Laws of unintended consequences swung things the other way of course and in retrospect it should have been a tax credit based on country of incorporation rather than GVW but that would have likely run us afoul of the WTO

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mitch Says:
August 7th, 2008 at 7:26 am

Late again

#59 Dagwood.

Reread my post, I did not say they were available, I said that not all Gm made is trucks and SUV..If you read it again, and please pay attention..I said they make all kinds, as do Toyota.

The Japanese are getting into the gas pig market..they just spent a ton of $$ so they need to launch even tho the timing sucks..

are tehy no longer available (metro firefly) No..because no one wanted fuel sippers, so they were dropped. japanese cars are the epitome of fuel sippers, its where they started, they aare not about to drop their bread and butter, and as their market grew, they needed to get into the gas hog market too..and they are, even friggin KIA.

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Statik Says:
August 7th, 2008 at 7:30 am

#130 JonP

“Statik, I have appreciated your stark observations of GM’s buisness as a good balance to the mass of GM lovers here. I have thought in the past that you were only being a realist, based on GM’s actual numbers, and not your love for the Volt. After reading your support for Bernie’s buisness suggestions for GM i’m not so sure.”

Hehe, I don’t endorse everything he says and he is a little ‘flamboyant’ to be my style. As I mentioned to him with my wording, “…‘manning the fort,’ hardcore style.”

As for the posts I was commenting on, he has the basic fundamentals down, he perhaps extrapolates them a little to far or a little too harshly, like post #21 as example:

“That said, no handouts, period! If GM wants help, let them go into Chapter 11 and cut Rick Wagoner’s outrageous salary.”

It’s hard to swallow like that, and is, unfortunately way too hardcore given the environment it is posted in. In other words it can’t be digested by the community, it is a attack, it can only be responded to as such.

What he should have done is explain why GM shouldn’t get a handout, then explain why he thinks Chapter 11 is viable given GM’s outlook, and just forget the whole thing about CEO compensation, that is just a reality of the entire corporate world, and is inflammatory to the board and is a battle that can not be won. (So in this post, I’m 66% agreeing with him on the issues he brings up…but not so much with the ‘over-the-top’/non-source backed delivery).

So long story short, I was just commenting really how he was being the contrarian to public opinion. Please do not take it as a endorsement of all opinions expressed or the matter of which it was delievered.

(End of disclaimer, lol).

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RB Says:
August 7th, 2008 at 7:38 am

Thinking back on the CNBC program, I remember these main points:

1. The most important market for GM is China with cars such as Buick and Chevrolet. NA is mature, but China is where the future lies.

2. GM’s heart beats faster when it speaks of the new Camaro. This is the car people within GM really care about.

3. The Volt is a new direction but very risky. As Bob Lutz said, he was happiest that the mule just worked.

4. Any financial difficulties were important but temporary, reflecting mainly public misperceptions of the quality of current products.

I thought the program was upbeat on GM and its prospects.

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dagwood55 Says:
August 7th, 2008 at 8:46 am

#146, RB, “GM’s heart beats faster when it speaks of the new Camaro. This is the car people within GM really care about.”

If true, that’s a real problem for GM, isn’t it? The car that people within GM should really care about should be something that can sell over 20K units/month at a decent markup. And if that car is a soulless appliance that meets people’s real transportation needs with mediocre performance, then, yes, their hearts should beat faster for a soulless appliance. And they should be building the very best soulless appliance on the market and very proud of it.

This is why Toyota sells over 40K Camrys and Corollas, each, every month.

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dagwood55 Says:
August 7th, 2008 at 9:00 am

#144, Mitch, When you say, “The Japanese are getting into the gas pig market…” a reality check is in order. Toyota has a toe in the gas pig market, Tundra production maxes at 200K/year. Honda’s “truck” is a unibody Accord-platform vehicle. Nissan’s Titan is a very small part of Nissan’s business. But none of their small car lines have suffered neglect because of these efforts.

GM made a decision to aggressively pursue the gas-guzzling end of the spectrum and ignored the small car end of the business. They reaffirmed and increased this commitment and de-emphasized small cars on Wagoner’s watch and they did this very aggressively in spite of the recurring fuel price spikes that we’ve seen since the early ’70’s, which not only beat Detroit up directly but which Toyota and Honda had proved capable of using as leverage to gain market share in the US.

In addition, GM didn’t do “world cars” that can easily be shifted into the US market to meet changing conditions. Getting the Astra here cost an additional $100 million in development. AND it’s built in Euros to be sold in dollars. This is a money-losing proposition, for sure. The development cost burden on the Astra, at it’s current level of sales, is currently running at something like $10K/car (year’s worth of sales).

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Jackson Says:
August 7th, 2008 at 9:12 am

For Hydrogen to be practical for cars, I said in earlier threads, you need either a way to make if from diffuse energy (sunlight) in a manner more efficient than using electrolysis from PV cells, or clean energy so cheap (from something like Thorium reactor technology or Fusion) that the portability of hydrogen outweighs the cost of the electricity. (You also need a fuel cell people can afford, and a way to store the hydrogen in a car).

Since that story wasn’t about the former, I still have to fall back on the latter. I won’t push my forecast back up to 50 years again, because of the plastic polymer replacing platinum in the fuel cells; but I now have to optimistically say that the expectation is at least 30 years out.

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Jackson Says:
August 7th, 2008 at 9:14 am

The CNBC show struck me the wrong way last night, but I do have to say that seeing the video of the Volt mule made it seem a lot more ‘real’ to me, and the program also revealed that Bob Lutz owns more than one tie.

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Bernie Torbik Says:
August 7th, 2008 at 9:25 am

# 134 JonP – “… The part that offends me is the way you present bankruptcy as if its the best option and not last resort. Where i come from you fight to the last man, you go down with the ship, you hold the line, etc………”

My apologies if my advocacy of Chapter 11 came across as GM’s best option. My view is that it is their ONLY option. Their borrowing capacity is exhausted, as will soon be demonstrated by their inability to repay bonds that are coming do over the next few months. I see little reason to throw good money after bad in the form of bailouts, loans, call it what you will.

GM can’t survive in its current, bloated form and radical transformation steps are required. The half-hearted measures taken so far are aimed at surviving another quarter or two. A company will less than 20% of the NA auto market doesn’t need 7 brands, let alone a chairman whose $16 million salary is obscene in view of his dismal performance. If it doesn’t use Chapter 11 as a mean of reducing its obligations to debtholders, pensioners, a total collapse is imminent.

You state that “… we are still talking about arguably the worlds largest automaker right. You act like were talking about Chrysler…”

Well, maybe the 2nd largest. In any case, GM isn’t “too big to fail”, and neither are Ford or Chrysler. Yes, there would be job losses, loan defaults, etc. The economy has been there before with the airlines and even municipal governments. I live in Orange County, CA, which went through bankruptcy in the 1990s after its treasurer made some poor investment choices. The result was a restructuring of its collective labor agreements and pension plans, and today, it is in much better shape financially than other CA counties that continued to do business as usual.

This discussion may all be moot in another 2 or 3 quarters. I don’t like the fact that what had been one of America’s largest, most successful companies is now on death’s doorstep. However, poor decisions by irresponsible management and unions have put them in their current situation. Taxpayers shouldn’t be asked to fund a bailout, and they GM (or Ford or Chrysler) fails, so be it.

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Van Says:
August 7th, 2008 at 9:27 am

It is one thing to say GM has a problem with public “misperceptions of the quality of current products,” and another to address why the Ford, GM and Chrysler products routinely get black dots for reliability in Consumer Reports magazine. Foreign makers seem always to make the best vehicle, no matter the class.

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Mike Says:
August 7th, 2008 at 10:05 am

This is capitalism at work; the shortsighted and weak die off to make room for the forward thinking and strong. GM (and all the other Ammurrrican auto manufacturers) should have started on the Volt when Toyota started on the Prius. If they had, they wouldn’t be whining and baawwwing looking for bailout money. They were too busy selling Yukons and Hummers, and creating new gashog (Jeep Comander anyone?) to think “GEE! American consumers are fickle; maybe we should balance our vehicle lineup more instead of making GASHOGS in case demand changes suddenly. But oh my! We’re making so much money with our GASHOGS! Let’s worry about that some other time!”

“Some other time” is here now, and someone was caught with their pants down.

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jan Says:
August 7th, 2008 at 11:30 am

I think GM should get some government assistance until the energy crises is better understood. Are lithium batteries the future? What is the future of E-85? Is global warming and flooding of coastlines inevitable. My point is what do you do with GM with so many uncertainties. I hear on this board that GM can’t pay their bills. I hear that small cars aren’t a viable business except in China and India. GM post reorganization will be like Chrysler in 15 years because there is no viable business plan, although I thought Chrysler was doing well pre-Daimler. GM profits come from overseas. Does GM need to abandon the USA and Canada, it seems that way to me. We can buy GM cars made in China. I’m rambling, I know. I think the USA has many other issues to deal with before it can give GM the answer it needs for its troubles. (people that live in glass houses. . .) But I’d sure like to own an E85 Volt.

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noel park Says:
August 7th, 2008 at 2:32 pm

A $45,000 Volt is not going to save GM.

#56 maharguitar:

It’s all fine that GM was producing the vehicles that the market demanded and that made them the best markup. But, I was taught in business school that one of the most, if not THE most, important functions of senior corporate executives is Long Range Strategic Planning.

These guys get paid millions of dollars a year, supposedly because they are substantially smarter that us average Joes. If they can’t anticipate turns in the market and, as Mike correctly points out at #154, “get caught with their pants down”, then they have failed in their responsibilities and should be replaced.

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Joy Says:
August 7th, 2008 at 3:24 pm

#153 Van
“It is one thing to say GM has a problem with public “misperceptions of the quality of current products,” and another to address why the Ford, GM and Chrysler products routinely get black dots for reliability in Consumer Reports magazine. Foreign makers seem always to make the best vehicle, no matter the class.”

The statement “seem to always make the best vehicle” is the most accurate one here. Perhaps you did not hear that Consumer Reports used to assume reliability for Toyota’s brand new cars, without waiting for survey data from owners. Sorry, but that brings Consumer Reports’ credibility down to just about zero in my book.

http://money.cnn.com/2007/10/16/autos/cr_reliability/index.htm

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dagwood55 Says:
August 7th, 2008 at 4:17 pm

#156, Noel Park, “These guys get paid millions of dollars a year, supposedly because they are substantially smarter that us average Joes.”

Not at all. These guys get paid millions of dollars a year because they are better at rising to the top of giant, bureaucratic organizations. They get there by merit, maybe, or maybe by playing politics, backstabbing, simply being well connected or just plain sucking up.

They should be good at strategic planning but, if they were, would GM be teetering on the edge of bankruptcy?

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noel park Says:
August 7th, 2008 at 4:26 pm

#157 dagwood55:

Exactly.

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DaveP Says:
August 7th, 2008 at 4:30 pm

#156 noel park
Yes, my sentiments, exactly. “Who could have anticipated $4/gallon gas?” is one of the lamest excuses for a lack of leadership that I’ve ever heard.
(The answer, of course, is “virtually every other car company but the big 3, duh”).
During my lifetime (and easily the lifetime of the heads of these corporations) this is the 3rd huge gas spike that has nearly driven them out of business (actually, the one in the 80’s totally nailed Chrysler) and they still didn’t see this coming? To be fair, GM did have some stuff like the Aveo ready to go, so they were not quite as pants-off as Ford and Chrysler. But still. They were not seriously competing in the small car market. Where they failed as leaders was not in making cars, but failing to convince the shareholders that it was important to sacrifice the margins somewhat to seriously compete in less profitable markets that would leave them prepared for energy instability. Basically, this is what they have only NOW done with the Volt. They’ve convinced the board and shareholders (that are left that they need to sink some money into something that will prepare them for the future.

Real leaders would have done that 10 years ago. Rather, they all caved when they ditched the electric development for Hummers (and even more blunderous, selling the critical tech to the oil companies!) It doesn’t take ANY leadership talent to steer the company in the path of least resistance.

However, that being said, the Volt may well prove foolproof even for these guys. They’ll be able to build whatever cars people want with little risk of energy destabilization because it can be energized from so many upstream sources. As nasaman always says, the cars will be incredibly reliable by design. It’s hard to imagine even the poorest leaders on the planet going wrong with the e-flex.

We should make sure they stay afloat long enough so I can buy one, anyway. I think it’s too early to talk bailout. If things go badly in Chapter 11 and it looks like the Volt isn’t going to happen, THEN we talk bailout.

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Mike Says:
August 7th, 2008 at 4:43 pm

#15 DaveP

I think this is indicative of how we, as Americans, are all about instant gratification. We want good things NOW, and are refusing to sacrifice anything *now* to get something later. Shareholders are the same way (Case example is of the AG Edwards/Wachovia merger. I’m an ex-Employee and they basically gave shareholders a huge upfront amount of money if the merger was approved. Check out Wachovia’s stock now)

I still don’t understand why companies selling cars overseas don’t bring their amazingly fuel efficient cars to the US. Crash standards are BS; that can be fixed with minor manufacturing changes. Go check out honda.co.uk/car/ and check out the UK Civic (which is incredibly sexy looking). The most effecient engine (Diesel) gets 55.4 MPG. Best gasoline engine is 47.9 MPG. :O

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Rusty Austin Says:
August 7th, 2008 at 4:55 pm

What REALLY aggravates me is how the Big 3 got in this position AGAIN after what happened the last time we went through a gas crisis. Toyota can’t make enough Priuses to come anywhere near meeting demand, and here sit Ford and Chevy and Chrysler with their thumb up their ass. AGAIN. But not to worry, I agree with John, there is no way Congress is going to let them go down. You and I and every other taxpayer will bail them out as sure as the sun rises in the east…honestly I think it might be better to let them either combine or go under, but then I don’t work in the industry. On the other hand they are such a huge part of the economy if they were to go under it would have such a ripple effect that there would be very few people who did not feel at least some pain.

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DaveP Says:
August 7th, 2008 at 5:00 pm

#144 Morgan:
Yes, no doubt Americans have always loved big, powerful cars. But I single out the SUV because it itself is special. Its rise to prominence is not solely due to the love of big, powerful cars. It’s a complex convergence of laws, perceptions, deceit and desires. It might be easy to write it’s success off as Americans love big cars (and certainly SUVs wouldn’t have sold if that were not true), but there’s really a lot more to it than that. That’s clearly a “necessary condition” it but the data shows it wasn’t a “sufficient condition” before some other stuff happened.

#139 Gsned57:
I think it really WAS a secret for a long time how much less safe they were. And today, I’m still disturbed by the fact that consistently safety shows up at the top or near the top of new car concerns (especially amongst women who are buying nearly half of all SUVs) (This data is a little old: http://4wheeldrive.about.com/cs/forwomenonly/a/aa092202b_2.htm )
Of course, safety means different things to different people. It’s not just smashing into stuff
“– Women have redefined automotive safety. The study revealed a surprising twist when it comes to women’s perceptions of safety features versus those of automakers. Power doors and windows and remote keyless entry’s traditionally marketed as comfort and convenience features, have been redefined by women surveyed as safety benefits.”
http://findarticles.com/p/articles/mi_m0EIN/is_1998_June_29/ai_50127414

So, I dunno. I’m surprised by how many of the people I know don’t know that the SUV they bought because they thought it was safe for their family have not even looked up the crash test ratings to learn how abysmal it really was. Not to mention how much harder it is to control to avoid an accident in an emergency.
(Not to mention they’ve dumbed down the crash test ratings to just a bunch of stars. Sheesh, they used to give crush factors and deformation numbers… Sadly, I guess it was too much information for most people. Sigh)

Clearly, this is a very informed goup in this forum and I think much more aware of what they are really getting when they buy than is the “average” consumer, if there is such a thing.

I guess what I’d really, really like is for the government to open it’s big data vault and really let the data out. How many people die who drive model X, that kind of thing. I get the distinct feeling that without that hard data, somebody is trying to manipulate me, and everyone else, somehow.

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DaveP Says:
August 7th, 2008 at 5:09 pm

#160 Mike:
Yes. And I suspect the REAL irony is that our own retirement funds may be the ones killing our companies and jobs. Those huge money funds got huge in part from our 401k funds and they’re often the majority investors of many companies and therefore are the ones forcing the focus on short term profits at the expense of our jobs.
Am I totally off base on that suspicion? I haven’t looked up all the numbers… Anybody know who the major shareholders are of GM and where they got their money?

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GM Volt Fan Says:
August 7th, 2008 at 6:26 pm

That was a pretty good program on CNBC. Most of us knew everything they were talking about with the Volt though. It’ll take awhile for everyone else in the world to catch up with us in Volt knowledge we’ve managed to pick up this year.

I think it is a GOOD idea to get guys like Dale Earnhardt Jr. and other race car drivers to test drive cars that GM intends to build. They probably notice lots of little things that the engineers might not think about. Subtle things like Dale Jr. was talking about with the suspension for the new Camaro. They probably know what a cool looking sports car looks like too since they probably own several already.

GM ought to get feedback and opinions from the outside and DON’T be insular like people think they are. Those designers especially need to get lots of feedback from people about what a “cool car” means to them. Exterior/interior designers might get carried away with their cars just because they want them to look unique and groundbreaking. Sometimes a good designer should just tweak those classic “proven popular” designs instead of doing radically new stuff.

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Joe Says:
August 8th, 2008 at 8:24 am

Bernie Torbik, you need to look past your nose… While you salivate over the demise of GM you seem to forget the fallout to America…
The “working americans” that count on their incomes from GM will no longer be there to support whatever it is that supports your income… That would be a shame … We all want to prop up a biased uninformed individual… Please, give credit where credit is due… GM is good for the country and IS producing a world quality product…

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eisemann-theater Says:
August 8th, 2008 at 11:09 am

When people say buying a Toyota is Green or just as American it’s totally false. Toyota using American parts? It’s not the parts or how the car is made it’s where the profits go. Also you are supporting American companies for parts suppliers even though the part is not made in the USA the company who designs the part is USA based.

First of all the only thing green about Toyota is American Money going to Japan.

Why are the Oil Guys so rich, Toyota Profits going to make Japan a better place?

When USA suffers the worse.

We need to stay away from foreign oil, foreign cars and products or American and our way of life as we know it will not exist.

This article shows the impact of you buying foreign products.

http://web.archive.org/web/20060818110902/http://www.levelfieldinstitute.org/docs/scorecards/ford-v-toyota-scorecard-lfi.pdf

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Bernie Torbik Says:
August 8th, 2008 at 12:17 pm

#164 Joe – I’m not “salivating” at the prospect of GM’s demise. What’s done is done: $50 BILLION of losses over the past three years, $40 BILLION of negative equity, debt that is worth a fraction of its face value – these are facts. If you don’t like them, do what should be done and urge GM’s Board to replace the incompetent management team that runs GM, starting with Wagoner.

The one option GM has, short of an ill-conceived, undeserved, taxpayer-funded bailout is to reorganize itself, and terminate agreements the business clearly cannot support (unless you question the facts listed above). GM has burned up $3+ billion of cash in each of the past few quarters; this can’t and won’t last, unless Uncle Sugar poors more money down the GM rathole.

GM is NOT indispensible. There are other, PROFITABLE manufacturers who can fill the market void left by GM. The growth of their market share over the past decades is proof of that. What the U.S. needs is a productive manufacturing sector that is profitable. GM is neither. It’s business model in NA is unsustainable, and if it goes out of business, so be it. What is far more likely, after an inevitable Chapter 11, is that it will remain in business in a greatly diminished form, albeit, profitable, and without the dead weight of its high cost union contracts, bloated management structure, and look-alike brands that contribute nothing to the bottom line.

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psklenar Says:
August 9th, 2008 at 7:32 am

I finally had a chance to watch this last night (recorded it Wednesday). It was actually a somewhat interesting show, but I’m curious, when was this show produced? Back in mid June there was talk about the Volt being in the $40K range, but then more recent discussion seemed to indicate a “sub $40K” price (albeit not by much). Then this show comes out and now the price is in the “$45K range”?

Where does this fit into the time line? Is this $45K price from a month or so ago, or is this truly the new expectation/target?

Thank you,
pat—-

ps, as some others mentioned, I also enjoyed the historical advertisements.

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Alex Says:
February 24th, 2009 at 10:23 am

Currently GM has an insurmountable challenge and a stable of brands that have lost their identity, Toyota is more successful with three brands than GM is with their 12 different brands, a clear sign of the times that change and consolidation is inevitable, below listed are the American/international brands owned by GM as well as a strategy to consolidate and help the company to survive in a rapidly changing business market. Below suggestions for merging entire brands into one entity, and reinvigorating certain brands under an international moniker could stave off bankruptcy and give gm the jolt it needs to become relevant in the auto market once again.

Daewoo/Holden/Pontiac merge into Holden Brand (3 Brands become 1 brand) These three brands currently sell similar products. Take three regional players and merge them together under the strongest brand which is Holden. This would introduce a new player to the U.S. market and give the former Pontiac brand more vehicles and a new purpose. The internationalization of the auto market requires that these type of brand-mergers become a reality.

GMC and Chevrolet merge into Chevrolet Brand (2 brands become 1 brand) most GMC and Chevrolet Vehicles overlap and are essentially rebadged copies, make it easier and consolidate into the stronger Chevrolet Brand.

Hummer and Saab sold either jointly or separately to a private equity firm or other automaker. (2 brands divested) Hummer and Saab both require huge sums of investment in their product lines, it makes the most sense to sell these two brands either together or separately at market value.

Opel/Vauxhall/Saturn merge to form Opel (3 brands become 1 brand) All of these brands essentially sell similar products. Take these three regional brands and form a strong international player under the Opel brand name. Saturn as a brand in the U.S. has no relevance but the opel logo and insignia could reinvigorate the entire company and product line.

* Possible that Buick as a brand could also be dissolved as they only sell three different vehicles and do not have a strong presence in their operating market. I could see this brand being totally phased out by 2020, the other GM brands would more than make up for the loss in product/branding. This would also allow GM to focus on the core Cadillac/Chevrolet brands and their newly minted international brands of Holden and Opel

Goals:

Reduce duplicative brand management

Reduce duplicative factories producing the same cars under different brand names.

Create strong global players in the automotive business, no more regional brands for GM

Realize economies of scale from consolidation of brand management, advertising, dealership networks.

The above mentioned steps seek to consolidate the GM brand network and dealer network into a more nimble organization. These mergers of core brands eliminate costly dealer-lawsuits from shuttering a brand, while being able to invest in our core surviving brands. The steps outlined above are far overdue and could be the jolt GM needs in order to reinvigorate their core business. The above outlined plan takes 10 brands and marketing strategies and whittles them down to 3 global brands.

The surviving names will be able to receive more attention and investment from GM and will be able to produce more relevant products. By merging brands and product lines the cost to GM can be drastically slashed since most brands carry similar products under different brand names.

The surviving corporate brands would be Buick,Chevrolet, Holden, Opel, and Cadillac, a drastic and necessary shift in response to market realities. I believe the plan put forth is the best way forward for GM and allows it to realize its many core strengths and keep their most prestigious brands. By cutting the brand and dealership network and merging divisions significant synergies and cost savings can be formed it also allows GM to better respond to market shifts and changes in consumer tastes. This way forward plan seems as though the least harsh and one that could provide the quickest results to the company.

This brand consolidation will streamline the entire company allow GM to get rid of non-core factories and duplicative management for its stable of 12 brands and allow the company to better focus on core brands. Toyota does with three brands, what GM attempts to do with 12. GM needs to keep 4 to 5 core brands and then heavily invest in creating a full line up for each of their strength brands. 2-4 good cars per brand does not do well anymore. This is not the 1950’s and GM’s dated brand strategy must go.

There will be immediate and long terms savings goals from factory/management consolidation of these many brands. Since a lot of the brand consolidation mentioned revolves around brands that each sell the same products under different brand name banners the consolidation should be common sense and is long overdue.

In addition to those mentioned steps GM must go through its line up and cut underperformers from production, do you really need 5 types of GMC Yukon’s to choose from? A faster switch to flex fuel automobiles and hybrid power trains will lift the company and boost sales, but GM must also cut most of its behemoth SUVs from the lineup to focus on fuel efficient crossovers. The changes we have experienced with gas prices and the automotive market are here to stay, it is time GM realized that.

I believe if all of the consolidation steps above are taken and GM invests in those core brands and introduces new products while streamlining factories and duplicative management that they will ultimately become a stronger corporation than even Toyota is today.

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