AND 
GM is in Race to Survive
Today GM reported very abysmal third quarter results, losing $2.5 billion and draining $6.9 billion is cash reserves. Not surprising, considering people aren’t buying cars, and if even if they want to unable to get credit.
GM had a plan to maintain its liquidity through 2009, but was based on sales rates of 14 million US vehicles, access to credit, and ability to sell assets. These objectives cannot be met. Their current cash reserves were $16.2 billion as of September 30, and the company needs from $11 to $14 billion to operate.
Thus GM needs cash and fast if it to avoid bankruptcy, which it has said isn’t an option. Apparently the plan to merge with Chrysler was more of a long-term one, GM’s most recent appeals for federal aid are simply for cash to keep itself solvent.
A recent study by CAR determined that the collapse of the big 3 US automakers would have an immense negative impact on the US economy.
Yesterday GM CEO Rick Wagoner, the CEOs of Ford and Chrysler, and the head of the UAW met with House Speaker Nancy Pelosi to try and implore the government to give the automakers a direct cash infusion as well as an additional $25 billion in loans. $25 billion in loans had already been approved but are earmarked specifically to allow automakers to retool plants for production of fuel efficient vehicles, not to fund operations.
Pelosi called the outcome of the meeting productive and said they discussed “how to protect hundreds of thousands of workers and retirees, safeguard the interests of American taxpayers, and use cutting-edge technology to transform blue-collar jobs to green-collar jobs for generations to come.”
In an ominous statement from todays press release GM has this to say:
Even if GM implements the planned operating actions that are substantially within its control, GM’s estimated liquidity during the remainder of 2008 will approach the minimum amount necessary to operate its business. Looking into the first two quarters of 2009, even with its planned actions, the company’s estimated liquidity will fall significantly short of that amount unless economic and automotive industry conditions significantly improve, it receives substantial proceeds from asset sales, takes more aggressive working capital initiatives, gains access to capital markets and other private sources of funding, receives government funding under one or more current or future programs, or some combination of the foregoing.
Executives from the Detroit 3 and the United Auto Workers will meet today with the House Committee on Financial Services. The hearing begins at 9:30 a.m.
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November 7th, 2008 at 12:13 pm
Webcast on conference call starts…like now (12:15):
http://www.gm.com/corporate/investor_information/earnings/index.jsp
If there is ‘going-forward’ reprocussions for GM’s employees/platforms and also the Volt project…it will be found here today.
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November 7th, 2008 at 12:17 pm
God Bless GM !
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November 7th, 2008 at 12:18 pm
I yi yi.
=D~~~~
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November 7th, 2008 at 12:22 pm
I want to make a bold prediciton…
Static is feverishly pounding away on his keyboard as we speak and will grace us with comments within the hour. LOL.
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November 7th, 2008 at 12:22 pm
Scary times for all of us, IMHO. “God bless us, every one.”
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November 7th, 2008 at 12:24 pm
I’m all for the Volt, but what is wrong with people supporting this?
IF A COMPANY CANNOT SURVIVE ON IT’S OWN, THE GOVERNMENT SHOULD NOT BAIL OUT THE COMPANY, ESPECIALLY WITH MONEY THAT IS PRINTED/CREATED ELECTRONICALLY OUT OF THIN AIR.
If you know anything about the free market, and what is best for the American People, you KNOW that GM should NOT get this money.
EVEN if I worked at GM for 20 years I would say the same thing. Would I pissed off if I lost my job?! Hell yes I would! But at the same time you have to realize that life doesn’t always go smoothly and sometimes change happens!
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November 7th, 2008 at 12:26 pm
Wagoner on the call (not word for word), “I would like to note before Fritz speaks, that the most forward looking, advanced technology programs are not being affect” and said Fritz would be detailing all the 09/10 cuts.
So…good news?
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November 7th, 2008 at 12:27 pm
#4 cautious fan
I want to make a bold prediciton…
Static is feverishly pounding away on his keyboard as we speak and will grace us with comments within the hour. LOL.
————————-
I already did…ahead of the thread, on the last one.
http://gm-volt.com/2008/11/07/gm-denies-rumor-volt-program-will-be-put-on-hold/#comment-77856
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November 7th, 2008 at 12:29 pm
Here is my ditty from the last thread:
GM reported a net loss of $2.5 billion or $4.45 per share for the third quarter, including special items. (thats the pension thing I referenced earlier-UAW Settlement Agreement becoming effective. in other words taking the BS credit for something that was supposed to be amortization after January 1, 2010.
On an adjusted basis, GM posted a net loss of $4.2 billion or $7.35 per share, compared with a net loss from continuing operations of $1.6 billion or $2.86 per share in the same period last year.
Lost 6.9 billion in cash, leaves them with $15,831…AFTER drawing out the 3.5 billion from their line of credit.
—-
Million dollar sentence, “(unless) it receives substantial proceeds from asset sales, takes more aggressive working capital initiatives, gains access to capital markets and other private sources of funding, RECEIVES GOVERNMENT FUNDING under one or more current or future programs, or some combination of the foregoing”
In english–”We need 13-14 billion to continue day to day operations, we have 16 billion left”
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November 7th, 2008 at 12:30 pm
Check this for a admittance of things that could (probalby go wrong) in the ‘forward looking’ section of the report…and no I didn’t smoosh it all together…GM did:
“Among other items, such factors include: our ability to maintain adequate liquidity and financing sources and an appropriate level of debt; continued economic instability or poor economic conditions in the U.S. and global markets, including the credit markets, or changes in economic conditions, commodity prices, housing prices, currency exchange rates or political stability in the markets in which we operate; our ability to realize production efficiencies, to reduce costs and implement capital expenditures at levels and times planned by management; market acceptance of our products including cars and crossovers; shortages of and price increases for fuel; the ability of our customers, dealers, distributors and suppliers to obtain adequate financing on acceptable terms to continue their business relationships with us; significant changes in the competitive environment, including as a result of industry consolidation, and the effect of competition on our markets, including on our pricing policies or use of incentives; changes in the existing, or the adoption of new laws, regulations, policies or other activities of governments, agencies and similar organizations where such actions may affect the production, licensing, distribution or sale of our products, the cost thereof or applicable tax rates; the effectiveness of recent or future actions by the U.S. federal government, including the $25 billion loan program for automobile manufacturers and suppliers and recently enacted legislation relating to mortgage assets; costs and risks associated with litigation; the final results of investigations and inquiries by the SEC; changes in accounting principles, or their application or interpretation, and our ability to make estimates and the assumptions underlying the estimates, including the estimates for the Delphi pension benefit guarantees, which could result in an effect on earnings; negotiations and bankruptcy court actions with respect to obligations owed to us by Delphi Corporation, a key supplier and our obligations to Delphi; negotiations with respect to our obligations under the benefit guarantees to Delphi employees and our ability to recover any indemnity claims against Delphi; labor strikes or work stoppages at our facilities or our key suppliers such as Delphi or financial difficulties at our key suppliers such as Delphi; additional credit rating downgrades and the effects thereof; changes in relations with unions and employees/retirees and the legal interpretations of the agreements with those unions with regard to employees/retirees, including the negotiation of new collective bargaining agreements with unions representing our employees in the United States other than the UAW; possible downgrades for GMAC or ResCap by rating agencies; GMAC’s ability to maintain adequate financing sources; developments in the residential mortgage market, especially the nonprime sector; and changes in the competitive markets in which GMAC operates, including increased competition in the automotive financing, mortgage and/or insurance markets or generally in the markets for securitizations or asset sales”
/hey all that kind of looks like my posts over,lets say…the last year and a half.
I would also like to mention that my prediction of the company line moving overnight from ‘hey everything is okie fine’ to ‘OMG, we are done, like right now, we were totally unaware of all these things around us…give us money, NOW!’ has now officially become true.
statik Says:
“I’ll predit EPS around -9 (ex items)…and cash burn around 6B, for the record” — ((November 6th, 2008 at 4:28 pm))
http://gm-volt.com/2008/11/06/gm-qa-volt-vehicle-line-executive-frank-weber-on-the-current-chevy-volt-mules/#comments
We got -$7.35 EPS, which I was a little high on, and 6.9 billion in cash burn, which I was a little low on. (Hard to tell the mix exactly).
/so thats it Cautious fan, lol…up to speed, heeh
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November 7th, 2008 at 12:31 pm
They should just give them the 50 billion they need. They bailed out the banks, they should bail out the carmakers too before a foreign takeover (that would suck).
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November 7th, 2008 at 12:32 pm
Save us Pelosi. The sky is falling. The sky is falling.
During war-time, people are quick to give up civil liberties and it’s difficult to get them back. And in tough economic times, people are quick to ask the gov’t to step in and make the problems go away.
In the 1930’s the Germans (like everyone) were struggling economically. The sacrificed principle and solved their problems, but what they gave up was far more valuable. Those who don’t learn from history are doomed to repeat it.
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November 7th, 2008 at 12:36 pm
Lyle,
Why not just give STATIK a line directly into this thread. I want to watch his every keystroke, as he excitedly taps in the next info-post…
My 2 cents, as I see it from the simplicity side:
1) 1 or 2 of the BIG 3 will not be around come 2009.
2) The survivors will thrive. People need cars, cars wear out, they MUST replace them eventually. So, everyone is now sitting on their wallets, waiting out this financial mess, but once the storm starts to ebb, you will see a spike in auto sales. The key now is surviving the onslaught.
My 2 cents are up….
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November 7th, 2008 at 12:36 pm
My solution:
Stop spending money on the damn wars overseas and wage a war against oil. Fine with me if the DOD wants to shift expenses to dumping money into gas-free Volts until we are not oil dependent.
Since that will never happen, I suspect a bailout will arrive shortly, although every bone in my body is opposed to it. I even own GM stock.
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November 7th, 2008 at 12:36 pm
From the call going on now:
Fritz Henderson:
“At this point we don’t really understand where we are in the economic situation right now”
“We expect the current level of sales (October 08 level) will continue though 2009″
“We expect oil to stay in the $60-$80 range in 2009″
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November 7th, 2008 at 12:37 pm
#10 Static
A little more self congratulatory than usual there Northern Sage. Uncle Uncle. I Yield. I’ll submit to you on all matters of finance. Kudos though. You clearly are skilled at financial statement analysis.
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November 7th, 2008 at 12:38 pm
I knew a few CPA who are dealing with GM for many years, and they are not telling me anything they are doing those days (understandable). Too bad, it is almost certain GM need Chpater 11 before 2009 if they do not get free $$$ from Nobama!
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November 7th, 2008 at 12:40 pm
More Fritz on the call:
“Nature of the credit markets: Closed. We have not been able to execute any planned activities there (planned 2-3 billion)
“500 million dollar further salary reduction”
“1.5 billion reduction in July, now pushed 2.5 billion farther into 2009″
Here is the part most people are interestes in “PROGRAMS THAT ARE PROTECTRED FROM CAPITAL REVISIONS THROUGH 2009: Volt”
————–
#16 cautious fan
#10 Static, A little more self congratulatory than usual there Northern Sage. Uncle Uncle. I Yield. I’ll submit to you on all matters of finance. Kudos though. You clearly are skilled at financial statement analysis.
—yes, as was mentioned to me, I am pulling my own arm off patting myself on the back today…I’m ok with that, I’ve been waiting along time, hehe
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November 7th, 2008 at 12:40 pm
Is there any value in investing in GM right now with the hilarious stock price?
If they Chapter 11, are investors screwed or do they somehow get to hold on to something?
If the government does hook them up with capital, do they avoid Chapter 11?
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November 7th, 2008 at 12:42 pm
Campy
BUY! BUY! BUY!
so I can SELL! SELL! SELL!
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November 7th, 2008 at 12:42 pm
#11 AlexS
And they should bail out the airlines, and the ethanol producers, and the mortgage owners, and the home appliance makers, and the computer makers, and the new home builders, and Wal-Mart (nevermind, they’re evil) and anyone else who can’t adapt to a changing environment. The money is free after all. The gov’t can just print more.
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November 7th, 2008 at 12:43 pm
GM was finished years ago in its current guise and is only now recognizing the obvious. I’ll offer them a few fresh ideas, since Wagoner, et.al have none:
1. Close down Buick, Pontiac, Saturn and Hummer in North America. Their combined market share is less than 5.0% of NA sales and can be made up by Chevy. If GM **HAS** to have a Pontiac or Buick model, let Chevy and Cadillac sell them.
2. File Chapter 11 bankruptcy and reorganize. Ditch the wage, pension and health agreements that should never have been signed.
3. Make some products that excite people and that they’ll want to buy. Not the miserable Cobalt or Chevy Traverse.
4. Fire Wagoner. He’s a moron and a joke as CEO.
5. Take key executives and have them travel beyond Flyover Country. The world doesn’t want more pickups, crossovers and monstrosities. Visit Europe, China and Japan and see what kind of CARS people actually want to drive.
6. Don’t grovel for a Federal handout. GM doesn’t deserve it, and none should be given.
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November 7th, 2008 at 12:43 pm
NBA!
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November 7th, 2008 at 12:47 pm
#18 statik “Here is the part most people are interestes in “PROGRAMS THAT ARE PROTECTRED FROM CAPITAL REVISIONS THROUGH 2009: Volt””
====================================
Reading carefully, I note that the statement says 2009, not 2010 when most of the Volt capital expenditures would otherwise occur.
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November 7th, 2008 at 12:49 pm
#6 Daniel
“I’m all for the Volt, but what is wrong with people supporting this?
IF A COMPANY CANNOT SURVIVE ON IT’S OWN, THE GOVERNMENT SHOULD NOT BAIL OUT THE COMPANY, ESPECIALLY WITH MONEY THAT IS PRINTED/CREATED ELECTRONICALLY OUT OF THIN AIR….”
My wife said the same thing. To which I replied, “But, what about my Volt?!!”
After a discussion, I convinced her that congress won’t let GM etc. go down the tubes and lose all those (ahem, union votes) jobs.
Expect another bailout, and the Volt!
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November 7th, 2008 at 12:49 pm
Who are those people in the picture and why are they smiling?
Is the picture old? If not and it is from today, I don’t see why Rick Wagoner is smiling.
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November 7th, 2008 at 12:50 pm
#21 Cautious Fan — I’m not as smart as statik so I would like a government bailout too please. Thank you.
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November 7th, 2008 at 12:51 pm
#26 Rashiid about the picture
============================
Wondering the same thing, I thought maybe the 100th birthday. surely not today
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November 7th, 2008 at 1:08 pm
I think the bottom was yesterday.
All the news today is bad, and stock prices are up.
Most stock market analysts know that there is a seasonal low in late October that usually rebounds in November. This has to do with farming instincts, preparing for the winter, and getting all your stuff stored safely.
The same is true with gas prices. Summer activities increase demand and drive the price up. After the summer, prices go down until heating oil kicks in. During presidential elections, this effect seems to be more dramatic.
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November 7th, 2008 at 1:11 pm
IYCSANJDSAAA is my goal for myself. Best of luck to all of you faithful bloggers. It looks like we’re gonna need it.
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November 7th, 2008 at 1:11 pm
I just hope that whatever happens with GM, they get the Volt out here on the road. My image of the company has improved greatly since I learned of the Volt program, and I hope to see it follow through. GM is doing the right thing by producing the Volt, so I hope they survive long enough to reap the rewards.
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November 7th, 2008 at 1:19 pm
It seems to me that at a minimum, absent a major infusion of cash from the government, that GM will have to seek some type of bankruptcy protection.
I would like to pose a question; what are the affects of an automaker getting bankruptcy protection? Will consumers still buy product from an automaker in bankruptcy?
It seems that the auto companies are much less likely to go chapter 11 than say, the airlines, even when their cash position is worse than the bankrupt airline. Some of the airlines are able to emerge stronger from chapter 11, is there any precident for a big auto company emerging from chapter 11?
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November 7th, 2008 at 1:20 pm
#30 noel park said “IYCSANJDSAAA is my goal for myself”
=========================================
It is an admirable goal. You might want to consider that statements of facts and deductions from them, sometimes called adult analysis, is not generally considered “nice” or not, as that is more of a “parental” value judgment. Perhaps, say, doing a problem in algebra is analytical with an outcome that is not a point on the line of “nice-ness”. (People seeing the result might be nice or not, however.)
That is, where you have facts and deductions that you might toss in, I hope you will do so.
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November 7th, 2008 at 1:24 pm
#31 Jake said:
“I just hope that whatever happens with GM, they get the Volt out here on the road. My image of the company has improved greatly since I learned of the Volt program, and I hope to see it follow through. GM is doing the right thing by producing the Volt, so I hope they survive long enough to reap the rewards.”
————————————————————–
I agree on all counts with everything you said. I’m praying there’s a good solution or series of solutions put into affect to get these Companies moving forward again. The Volt, and cars like it in the planning stages at other companies as well, hold the promise of a brighter tomorrow. Lord, please help us all!
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November 7th, 2008 at 1:28 pm
Let them go under, then start again from scratch. It wouldn’t be the end of the world. People will always need cars.
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November 7th, 2008 at 1:30 pm
Believe it or not that is an actual photograph of the Big 3 CEOs meeting with Nancy Pelosi last night.
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November 7th, 2008 at 1:30 pm
ysf – Obama is not president yet, he is still just a Senator, he can jawbone, but that is it. If GM can’t make it through this year, it is bankrupt unless Pelosi manages to get something through Bush. I still believe they would be better off going through Chapt 11.
I am certainly no sage on the stock market, but I don’t believe all the bad news has hit. We still have a lot of deleveraging left in the hedge funds. Several more months of bad news and the market will be seeking uncharted territory.
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November 7th, 2008 at 1:30 pm
30 noel park
“IYCSANJDSAAA”
I know this one, “IYCSTHGOOTK”, K being kitchen. But what’s all that stuff after the first “S”?
=D~~~~
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November 7th, 2008 at 1:47 pm
#36 Lyle
“Believe it or not that is an actual photograph of the Big 3 CEOs meeting with Nancy Pelosi last night.”
——————-
I wonder if they all were thinking,
“Oh, crap, who is this jackass taking a picture? This is going to be the picture that is going to be smeared all over the place when we have to ‘fess up tomorrow.’ Hrm, I wonder if should I look elated, really happy…or just plain old generic happy in the picture”
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November 7th, 2008 at 1:49 pm
What happend to the money they made till now and why this crisis only for US car makers ?? I don’t see Toyota/Honda/Hyundai crying this way
Answer is simple : People started to shift to quality/durable cars.
Last day i was talking to a friend and told in 2010 i want to go for a GM volt and the immideate answer : As an owner of a GM car for 6+ years , Never buy a GM car, problems comes with it. I am using it because i cant sell it.
Long way to go for GM. If volt comes as another GM car , I think its end of GM.
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November 7th, 2008 at 1:49 pm
#36 Lyle says,
Believe it or not that is an actual photograph of the Big 3 CEOs meeting with Nancy Pelosi last night.
——-
I am shocked. Then Wagoner should be crying, not smiling.
They should all be crying. But they are probably remembering the big fat checks they are all going to get, whether or not their respective company fails.
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November 7th, 2008 at 1:52 pm
I’ve said, before, GM is just a canary in our coal mine of the economy. While I was against bailing out Chrysler on principle a couple decades ago (and that actually made us money) I think we have to bail out GM. Why? It’s not that they are too important to fail, no one company is. It’s that it’s 1929 and Herbert Hoover is going to usher in the Great Depression. Without massive government intervention, most of us will be out starving in the streets given another year or so. They “bailed” out the banks, but (as I feared) it hasn’t gone much farther than the banks themselves. It will, but it will be too slow to stop the depression.
For those who really feel strongly that the ends don’t justify the means (as I do) you still have to sit back and ask yourself “How far are you willing to go?” Are you going ot let people starve in the streets?
Are you, really?
(that kind of outcome frequently topples governments, too). If you’re not willing to go there, then I submit that bailing out a few corporations NOW is going to be substantially more cheap and practical than allowing the 2nd Great Depression and all the spending and government programs and WAR that got us out of that.
The government and industry F’d up big time. BIG time. BBBBBIIIIIGGGGG TTTTTIIIIMMMEEEE!!!! The situation is so grave it probably won’t make a bit of difference if we bail GM out or not at this point. It’s probably worth the risk to bail them out, though. If it ultimately doesn’t make any difference the cost of having done so will be quickly dwarfed by the spending required to claw us out of Depression II.
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November 7th, 2008 at 1:55 pm
A reporter just pwned Fritz, (paraphrased):
“Anyway you can update what the cash situation now, or the end of October rather than at the time of this report at the end of September? Or possibly what the low point of cash?”
“Um, well, we really can’t say for sure, we don’t have the ability to tell you that number”
Yeah, I believe that. Puh-shaw. I know personally I have no clue how much cash I have in the bank. Much like GM, I only get that sort of information quarterly…and a month late.
Great question.
+1
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November 7th, 2008 at 2:03 pm
#42 DaveP.
I don’t know if bailing GM out is a good thing or a bad thing.
But if they do get bailed out, the people at the top should get a MASSIVE
pay cut.
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November 7th, 2008 at 2:05 pm
Looks like My Father will be moving in with me (He retired from GM after 30 years).
Why did the Government not increase the CAFE standards with some sort of crescendo? I know no big Government regulation. But look at the state of affairs. How can foreign auto makers be outdoing American ingenuity? Are we becoming stupid or is the rest of the world becoming smarter? How can years of profit just not be there anymore?
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November 7th, 2008 at 2:08 pm
Government intervention in the 30s did not end the great depression. Some folks say it actually extended and deepened it. The only thing that will get us going again is the return of “real” free markets, not this one where protectionism is on one side, silly government regulatory requirements on another and bailouts rule the day.
This goes back to insane government interference in the credit markets, allowing (forcing?) credit upon folks who did not have the income or demonstrate the ability to repay the loans. This tied up billions in capital that could otherwise have been placed at the disposal of those who would actually DO something with it (expand factories, invest in research, etc).
I wish I could understand the HUGE decline in GM sales last month. It doesn’t make a whole lot of sense. But let’s take a look at something else. Consumer spending is being cut back, meaning more folks are leaving money in their bank accounts. This may have the intended short term effect of making more money available to loan out.
I think the “perfect storm” of the real economic problems, amplified by the campaign rhetoric on both sides and reinforced by a “if it bleeds it leads” media culture has made this much worse than it should have become.
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November 7th, 2008 at 2:10 pm
#44 Rashiid Amul:
Absolutely!
And they should all be forced to drive 1980 Oldsmobile Omegas.
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November 7th, 2008 at 2:11 pm
I have been reading this blog for nearly a year now and having read about the great quality of foreign cars I have begun to wonder why they bother to build service dept. and who gets to park their great cars in them and out of the weather
Again, I state, I have a 99 buick with 182,000 miles on it and the only thing I have had to do other than normal maintance is have ONE gasket replaced.
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November 7th, 2008 at 2:14 pm
#42 DaveP said ” It’s that it’s 1929 and Herbert Hoover is going to usher in the Great Depression”
==============================================
We care a lot about GM because of the Volt, but let’s not go overboard. Car manufacturing is not banking. The USA can get along with or without any particular car company. There will not be a shortage of cars. The rest of the economy will continue to function.
I don’t minimize the impact on GM employees or their suppliers, which may be serious and in some cases heartbreaking. That does not mean that what happens with GM is a forecast of any particular thing for the country as a whole.
There is symbolism associated with GM, and I understand that too. On the other hand, companies (even big companies) carrying lots of symbolism go out of business, operations reorganize, life goes on. As an example, think about the Penn Central railroad. At its peak as the Pennsylvania RR and the New York Central RR the company was huge and powerful. Even later, when the Penn Central went into bankruptcy, it seemed to be something that just could not happen. There were many investors who lost money and many other repercussions with suppliers and shippers, but the core operations were picked up and continued on.
The healthy parts of GM will likewise continue on, one way or another.
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November 7th, 2008 at 2:15 pm
#46 Tony Gray:
I think the sad truth is that people don’t have any money in their savings accounts. They’ve been using MEWs (Mortgage Equity Withdrawls) to spend money they didn’t have since the end of the dot-com bubble SHOULD have triggered a big recession.
Any savings they had in their retirement accounts was almost assuredly invested in the stock market and so now that’s been wiped out, too.
The consumer doesn’t have any cash, can’t get any loans and can’t buy anything. That situation isn’t going to change on its own.
Oh, and the average citizen F’d up big time, too. I left them out in the first rant.
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November 7th, 2008 at 2:17 pm
#36 Lyle said “Believe it or not that is an actual photograph of the Big 3 CEOs meeting with Nancy Pelosi last night.”
=========================================
It is hard to believe. I’ll bet they regret that photograph now. Let us hope that it was a moment of levity that preceded the actual serious discussion, and that the picture was just a moment that was frozen in time but not typical.
I can picture the reaction the photograph will bring on, in the mind of the guy who is losing his job this week.
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November 7th, 2008 at 2:19 pm
Let’s say GM gets the government loans —- then what?
Then — nothing — consumers still aren’t going to buy many cars (in this overspent no more cheap credit environment) and therefore GM still can’t sell many cars.
So the taxpayers are supposed to support this in hopes of a retooling transition? I’m supposed to trust that Rick Wagoner (who’s been CEO since before the EV1 got crunched) and Nancy Pelosi have talked this whole thing over and it’s a great plan?
Are you effing kidding me?!
File chapter whatever, new management, start over. Leave my tax dollars out of it.
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November 7th, 2008 at 2:21 pm
Here’s some info regarding GM and its expenditures. It seems that many model introductions will be delayed, however, the Volt and other fuel economy initiatiives will see increased spending.
http://www.gminsidenews.com/forums/f12/gm-confirms-product-retiming-revisions-cruze-9-4-track-volt-increases-71149/
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November 7th, 2008 at 2:23 pm
statik #43 quoted fritz regarding GM’s cash at the end of October
““Um, well, we really can’t say for sure, we don’t have the ability to tell you that number”
==================================================
It’s when they say things like this that you learn to be very cautious about anything they say. If you took fritz’s statement as literally true, things at GM would be even worse than if the statement is reflecting fritz just not wanting to say and then responding awkwardly, which I think is the case.
(I am showing my annoyance with fritz by refusing to capitalize his name.)
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November 7th, 2008 at 2:23 pm
#49 RB:
Normally, I’d agree with you. As I said, I would have let Chrysler go under two decades ago.
I just think this time is different. I think things are much, much worse than they seem on the surface. The more I dig into it, the worse it looks.
I certainly hope I am wrong. But remember, banking is still not functioning. Most companies have been caught with their pants down and no cash on hand. If TOO many fail before the banks get their acts together, the death spiral with be unstoppable.
That’s my fear. So, it’s not so much a matter of preventing GM from going under, it’s more a matter of preventing them from going under NOW.
And while we’re at it, it would be nice if they lasted long enough to get a \Volt out of them.
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November 7th, 2008 at 2:24 pm
#50 DaveP
You are probably right. I have been VERY conservative in my spending habits (paying off credit cards every month, not making huge purchases), but do know people who live far beyond their means. My 201K is now waaay down, but I’m luckily 15 years or so away from retirement. I do feel sorry for folks who were looking to retire now and live off their investments. That may have to be postponed for some years for them at least.
I think we need to get stability and confidence back into the overall system and quick. Otherwise this crisis will look minor by comparison.
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November 7th, 2008 at 2:27 pm
Ok I finally found out what LJGTVWOTR means, after being told “ignorance was bliss” so not trying to seem ignorant again, or blissful, what the “$%^&*^” does “IYCSANJDSAAA” mean?
NO PLUG, NO SALE, LJGTVWOTR, NOW, OR GO DOWN THE TUBES, (I guess) =D~~~~~~~IYCSANJDSAAA
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November 7th, 2008 at 2:29 pm
Also, let’s see some new management that didn’t actively lobby against CAFE standards to preside over the retooling. Wouldn’t that make more sense?
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November 7th, 2008 at 2:29 pm
#42 DaveP
You seem like you have some strong opinions on the subject of bailouts, hehe. A lot of people support the word ‘bailout,’ so OK, the time has come for the government to bail them out. They have maybe 8-12 weeks to make it happen, so we should discuss.
Define bailout, here are the questions:
How much cash are we willing to spend to bailout?
What is the cap?
GM can NOT surive without Delphi, too many ‘mission critical’ parts, how much to bail them out?
GM can NOT survive without GMAC, how much to bail them out? Or will the gov’t finance all the dealer lines of credit and consumer car loans?
GM has 12 (?) billion in comittments to VEBA, if the gov’t steps in, I have a feeling all those reitred employess are going to require GM to pay for that…especially if the gov’t is backing them…are we ok with that?
How much extra cash to for future operations/R&D do they get?
There is no model or reasonable expectation for GM making a profit in the next few years…is bailout money limitless as they continue to lose 2-3 billion dollars going forward for the foreseeable future?
Saying bailout is relatively painless, but defining the bailout and selling it to the public is something else. If your going to do anything and you want them to survive, why not let them go bankrupt and offer them protections coming out? Even if they get a bailout, they are still going to downsize/fire as many people as if they were streamlining inside bankruptcy.
That is the failure of the CAR report about the ‘impact’ of the loss of the big 3. It does not account for or do a comparison of the ‘impact’ on the economy even if the ‘big 3′ survive. It still lists all their old employment numbers/figures and assumes things like ‘unskilled trades’ making 65k+.
I don’t see the advantage of a bailout in this situation. Basically your are using resources to save a drowning old man who is also dying from cancer instead of healthy children that have fallen into the water.
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November 7th, 2008 at 2:32 pm
#52 carcus:
It delays the (what might be) inevetable. The economy can absorb some companies going down the tube, it won’t absorb very many all at once. GM is a pretty big domino. They won’t be the only one to fail soon. Or maybe the others won’t fail outright, but if they all lay off 30% of their workforce; blammo, you have the Depression again.
It’s certainly possible I’m being overly pessimistic. I don’t happen to think so. I’ve not sold my house as Statik has, but I’m certainly shoring up my safety position as we head into whatever we’re heading into. One thing is certain, we have only just begun this and only time will tell how bad it gets.
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November 7th, 2008 at 2:32 pm
DaveP #50 says,
Oh, and the average citizen F’d up big time, too. I left them out in the first rant.
————-
I was with you until the statement above. What does that mean?
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November 7th, 2008 at 2:39 pm
#59 statik:
You’re right, of course, it’s a lot easier to say “bailout” than to do it. I actually have to get to a meeting so I’ll have to write more later.
I think GMAC should get in with the rest of the finacial pool. They’re moving to do so (saw an ad on TV for a GMAC savings account!
but it’s happening way too slowly to help.
As for the rest of the costs, let’s look at it another way. How long do they have to survive to keep a huge drag off the economy when it is barely teetering along? A year? 12 billion? Two years? 24 billion? 6 months? 6 billion? At this point, I’m not entirely sure…
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November 7th, 2008 at 2:43 pm
C’mon Stakik, Noel Park, somebody, what’s it mean???
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November 7th, 2008 at 2:45 pm
Here’s a letter from my business partner to Senator Durbin about the bailout…
Senator Durbin:
I read this morning of yesterday’s meeting between the Detroit automakers and House Representatives. It was their plea for another bailout that prompts this message.
I worked for a Detroit-based GM advertising agency for 12 years. My job was to help craft their public image, but it also gave me a clear, hard-nosed look at the company and their philosophy.
Understand that this was in the early 80s, when the Japanese and Europeans were already making huge inroads into their market. At a time when the American public clearly wanted more fuel-efficient cars, they spurned it. “We like big cars,” engineers told me. “We make more money.”
When Congress moved in the mid 80s to pressure Detroit to put airbags into cars, GM balked. “It would be too expensive. Consumers don’t want them.” Instead, GM rolled out a $100 million ad campaign telling consumers to wear their seat belts. They successfully lobbied Capitol Hill to bury the legislation. In 1985, however, when European carmakers made driver-side air bags standard, the car-buying public responded with enthusiasm. GM’s response? Lobby Capitol Hill. European carmakers had an unfair advantage, they said. No one knew people would want these things.
In the early part of this decade, Washington gave Detroit $1 billion to develop hybrid vehicles. Toyota and Honda got nothing. Yet, by 2004, the Japanese had 3 hybrids on the market. Detroit had none. When California proposed to raise the CAFE and require that any automaker doing business in their state have at least 1 hybrid vehicle, Detroit returned to Washington, where they again complained that the Japanese — who’d received no money from the US — had an “unfair advantage.” Congress was implored to block California from moving forward with its proposal.
The list goes on. 35 years ago, Detroit knew the perils of building low-mileage cars. They were effectively given a head start on the current crisis. They squandered it. During the Reagan years, they lobbied for the overturning of the CAFE. The Ford Model T got 26 miles per gallon. 100 years later, that’s the current fleet mileage for all cars produced in this country.
My point is obvious, but I’ll belabor it. Detroit has always shown itself contemptuous of smart, responsible business practices. Had they acted in a timely fashion, we could be leading the world in fuel-efficient vehicles. Instead, one month after the $25 billion handout, Ford introduced its new 3-ton, 16-mpg 150 pickup this week. Two years ago, with gas prices already on the rise, Rick Wagoner said GM’s strategy for rebound was more SUVs and trucks.
Detroit has always put short-term profits before long-term growth. As a result, they’ve gotten neither. Rick Wagoner’s attempt to fear-monger yesterday by saying that GM’s collapse would imperil the entire US economy should have had lawmakers asking, “And how does that make you feel, that your continued ineptitude and disregard for the obvious could wreak such widespread havoc?”
I fully understand the pressure you and your colleagues are under to act in the interests of the greater good. My own, free-market instincts are to let them fail and let Toyota pick up the pieces. (I did vote for President-elect Obama, by the way. Enthusiastically.)
This is not the time to settle scores or for recriminations, but neither is it a time to reward bad practices. Hand Detroit another $25 billion, and they will as surely squander it as they have the last 35 years. If you are to give them this lifeline — paid for by my taxes and an even greater burden placed on future generations — I ask that you do so not just with strings attached, but with 12-inch thick hawsers. Detroit must commit to a meaningful goal within 5 years. Hydrogen vehicles. A 50 mpg CAFE. The technology is there. They just need to apply it to fuel efficiency instead of high-accelerating, boat-towing hogs.
In the process, they will serve the interests of taxpayers and our economy, but their own shareholders.
Thank you for your time and consideration.
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November 7th, 2008 at 2:46 pm
My name says it all.
I bet the know it all “I’m the smartest person in the world” top management fired the person that tried to tell them to prepare for a rainy day. Sell assets at the TOP, not the bottom. Duh!
Don’t worry, GM won’t close its doors. We will pay for thier arrogance either thru inflation or Pelosi just taking the money out of our wallet.
Long live the Socialist Republic of America.
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November 7th, 2008 at 2:46 pm
#6
“EVEN if I worked at GM for 20 years I would say the same thing. Would I pissed off if I lost my job?! Hell yes I would! But at the same time you have to realize that life doesn’t always go smoothly and sometimes change happens!”
So if you are a retiree, with a full pension and pension benefits from your years of service, and it suddenly is GONE because they go bankrupt..that is ok with you?
Even with federal pension protection plans in place, it would be a mere shadow of what you are used to, and expecting.
And remember there a MILLIONS of retirees from the big 3..imagine the strain on medicare and pension protection funds, and the housing market as retirees are forced to sell etc..
Sorry but that statement is ok applied to 10 people, maybe 100 or even a 1000..but MILLIONS is a whole new scale.
and sorry makes your statement rather assinine, and rather not well thought out.
The problem people seem to fail to see is the SCOPE..the auto industry still directly and indirectly affect 1 in 7 US jobs. That is employment, and the figure for retirees is not counted there.
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November 7th, 2008 at 2:48 pm
#60 Dave P.
“—you have the Depression again”
_________________________________________________
I tend towards pessimism myself. But this is not 1930. If the market is allowed to work itself out, it will happen at a rapid pace. No bread lines, no soup kitchens, etc…
#6 Mitch
Too big to fail is socialism. Socialism is asinine.
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November 7th, 2008 at 2:54 pm
What I wounder is how GM went form $70 Billion cash to $16 Billion in about a month ? Stock Holder question .
GOD BLESS
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November 7th, 2008 at 2:57 pm
Three months before I was elegible for a pension, I was layed off, I was brought back as a contractor to help them fill out the patent applications. I am sympathetic, but do not want to pay my tax dollars for your pension.
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November 7th, 2008 at 2:58 pm
Obama says the auto industry is a priority. He wants the loan money released ASAP and consideration of further aid.
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November 7th, 2008 at 2:59 pm
#18 Statik
“Yes, as was mentioned to me, I am pulling my own arm off patting myself on the back today…I’m ok with that, I’ve been waiting along time, hehe”
———————–
Well, if you wear your arm out patting yourself on the back, you can borrow either of mine. You deserve the patting on the back. Damn it!!!!
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November 7th, 2008 at 3:00 pm
The oil companies have BILLIONS in reserves. The low interest loans should come from them. Since they don’t seem to be in any hurry to drill, they should invest in the industry that creates the demand for their product. If the Big 3 fold and millions are out of work, can they really afford a great depression?
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November 7th, 2008 at 3:05 pm
#38 George K & #57 Casey:
Just a quote from my dear mother, circa 1955:
“If You Can’t Say Anything Nice, Just Don’t Say Anything At All.”
Ruth Park.
Sorry guys, I just sort of make ‘em up as I go along. I’m just as scared and frustrated as anybody. I’m just trying not to dump it on you.
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November 7th, 2008 at 3:21 pm
#48 Old Man
“Again, I state, I have a 99 buick with 182,000 miles on it and the only thing I have had to do other than normal maintance is have ONE gasket replaced.”
—————–
The problem with American cars is primarily American drivers. Most of us do not take care of our vehicles like we should. Foreign automakers do a better job of convincing owners to bring their cars in for routine maintenance. Owners of foreign cars, most notably Japanese car owners, are especially more motivated to do routine maintenance. I don’t know exactly what causes this “imbalance”, maybe a gene somewhere in our bodies, but there seems to be a difference in attitudes. Some owners of American cars are motivated to take really good care of their cars and trucks and see them last and be dependable. I have seen foreign cars in pretty bad mechanical shape quite a few times. Maintenance is the key and that takes money. If you are not willing to spend it on routine maintenance, then you will spend it on buying a new car sooner rather than later. IMO.
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November 7th, 2008 at 3:23 pm
Please buy a Camaro and save GM.
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November 7th, 2008 at 3:24 pm
#63 Casey
C’mon Stakik, Noel Park, somebody, what’s it mean???
——————————-
What does what mean?
Everything means nothing, lol.
What does this mean for GM? It means they are 50/50 for bankruptcy by Christmas. 99% bankrupt in Q1.
There is nothing left, no room for deception and no possible scenario they don’t go under. GM was juggling a lot of balls the last decade or so…and they have all fallen to the ground.
The end is coming…and it will no longer be measured in years, months or even maybe even weeks. If sales are still trending at the -45% sales clip (I don’t see why they would not be….or worse), we should be counting GM’s life span in days. 45-90 seems about right…depends on how they can manipulate creditors/suppliers (which is impossible to gauge…the Delphi thing alone next month is huge).
Side note, Now THIS is telling about current/future sales:
GM ‘temporarily’ lays off 500 workers in Oshawa…on the IMPALA line. This 3 shift line is one of the ‘brighter’ spots in the GM lineup…it has had robust sales comparitively speaking and is a virtual cash cow, (as the platform is a old one…well into the ‘payback’ phase of its lifespan).
http://www.reuters.com/article/marketsNews/idCAN0739897020081107?rpc=44
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November 7th, 2008 at 3:40 pm
Casey – it means “If you can’t say anything nice, don’t say anything at all”.
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November 7th, 2008 at 3:45 pm
They need to file for bankrupcy first, just like the airlines did. They really need to revamp their entire business model including the dealers. If they can’t do it let someone else do it. I’m sure Tesla would like to grow even bigger.
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November 7th, 2008 at 3:57 pm
#74 n riley
The problem with American cars is primarily American drivers. Most of us do not take care of our vehicles like we should. Foreign automakers do a better job of convincing owners to bring their cars in for routine maintenance. Owners of foreign cars, most notably Japanese car owners, are especially more motivated to do routine maintenance. I don’t know exactly what causes this “imbalance”, maybe a gene somewhere in our bodies, but there seems to be a difference in attitudes. Some owners of American cars are motivated to take really good care of their cars and trucks and see them last and be dependable. I have seen foreign cars in pretty bad mechanical shape quite a few times. Maintenance is the key and that takes money. If you are not willing to spend it on routine maintenance, then you will spend it on buying a new car sooner rather than later. IMO.
———————–
I think the problem comes from the specific vehicles they make.
Foreign cars are more likely to be smaller/more economic cars just by the nature of gas prices from the manufacturers homebase or point of origin. Whereas historically, NA automakers build ‘monster’ cars…relatively speaking.
A older, larger car is virtually worthless on resale after 5-6 years, whereas a thrifty car returns some value to its owner over the same time period.
The smaller/eco friendly cars (like the Japanese models) are cared for, because the owner is protecting his investment. The ‘whales’ (mostly NA made) are beat into submission because the owner wants to get ‘every penny’ out of it before it goes for scrap.
ie) Nobody wants a 6 year old Grand Prix GTP or Cadillac DTS… it is too much on gas for people in the 6 year old car market…and too much to fix/insure. A 6 year old Honda Civic still has value, people looking at a 6 year old car want something easy on the budget that sips gas.
It is just by default that ‘Japanese’ get the credit over the ‘Big 3′ I think. The Japanese just have a intensive small car/frugal lineup, they always have…the historical majority of ‘Big 3′ lineups have been ‘whales’.
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November 7th, 2008 at 3:59 pm
#13J EC Says:
2) The survivors will thrive. People need cars, cars wear out, they MUST replace them eventually. So, everyone is now sitting on their wallets, waiting out this financial mess, but once the storm starts to ebb, you will see a spike in auto sales. The key now is surviving the onslaught.
———————–
I agree. There’s lots of money on the sidelines right now. Its just when will people feel comfortable to jump back in? Even if their car breaks down, maybe the will just buy a beater from someone who has an extra one and wants cash.
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November 7th, 2008 at 4:04 pm
I hoped we would see a spirit of bi-partisanship in congress especially after the Democrats could not sell the Republicans on their first bail-out plan. I was hoping Pelosi would have at least included the two top Republican house members in these discussions with GM, Ford, Chrysler and Labor. Maybe she thinks she does not need their support. That is what they thought about the first bail-out bill. I suspect the Democrats will stuff enough ear-marks and pork in any financial aid bill that most Republicans and some conservative Democrats (are there really any of these left anymore?) will choke on the bill and throw up all over it. Now is the time for the two parties to come together and create a bill that will be supported by both sides. They need to work together, not against each other.
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November 7th, 2008 at 4:09 pm
Here is a list of consolidated changes in production/staffing all from today, as best I can tell:
“3,600 workers will be laid off indefinitely beginning early next year as the automaker slows down production at these 10 assembly plants”
Effective Jan. 12:
– Lansing (Mich.) Delta Township; manufactures Enclave, Acadia
– Oshawa (Ontario) Consolidated; Impala
– Hamtramck (Mich.); DTS, Lucerne
– Wentzville (Mo.); Savanna, Express
Effective Jan. 20:
– Bowling Green (Ky.); XLR, Corvette
– Lordstown (Ohio); Cobalt
– Spring Hill (Tenn.); Traverse
Effective Feb. 2:
– Fairfax (Kansas City, Kan.); Aura, Malibu
– Orion (Orion Township, Oakland County, Mich.); G6, Malibu
Effective Feb. 9:
– Lansing (Mich.) Grand River; CTS, STS
http://biz.yahoo.com/ap/081107/gm_production_glance.html?.v=1
I don’t really understand why all these changes get rolling in 8 weeks/new year from now…they need this done now, there may be logistical issues attached or contractual commitments through the end of ‘08.
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November 7th, 2008 at 4:12 pm
#79 Statik
I don’t totally agree with you on your analysis. Just because a car or truck is a big American made product does not mean it will not last a long time if the owner takes the time and money to maintain it properly. I have owned both large American cars and trucks and Japanese made cars and trucks. While the Japanese cars and trucks were smaller and had some better quality of workmanship they tended to last no longer than their American counterparts when I skimped on the maintenance. I soon learned to spend a little here and there on maintenance. It saved me money whether it was on a American vehicle or a Japanese vehicle. I tend to keep my vehicles for 10+ years when maintained properly and sometimes 14 to 15 years. When I sell or trade those 10 year old cars or trucks its because I just want a newer vehicle. Not generally because I have an undependable vehicle.
It’s like a lot of other things in life. You have to invest some time and money to keep things working as they should. Every married man knows this. Look at how much we invest to keep our wives “working” properly.
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November 7th, 2008 at 4:15 pm
Maybe Toyota or Honda will snap up the Volt / EV-2 program off of GM when GM is sold off. It’s really a great little concept, and I know that if it were in competent hands it would do well. In fact, it looks so much like the current model Civic it would be a slam-dunk to make EREV an option on the Civic.
And Honda could even build it in Marysville, Ohio.
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November 7th, 2008 at 4:27 pm
#83 n riley
I don’t totally agree with you on your analysis. Just because a car or truck is a big American made product does not mean it will not last a long time if the owner takes the time and money to maintain it properly. I have owned both large American cars and trucks and Japanese made cars and trucks. While the Japanese cars and trucks were smaller and had some better quality of workmanship they tended to last no longer than their American counterparts when I skimped on the maintenance. I soon learned to spend a little here and there on maintenance. It saved me money whether it was on a American vehicle or a Japanese vehicle. I tend to keep my vehicles for 10+ years when maintained properly and sometimes 14 to 15 years. When I sell or trade those 10 year old cars or trucks its because I just want a newer vehicle. Not generally because I have an undependable vehicle.
It’s like a lot of other things in life. You have to invest some time and money to keep things working as they should. Every married man knows this. Look at how much we invest to keep our wives “working” properly.
————————————-
I don’t know..I think we agree with each other. I was trying to stay away from saying all Japanese or American cars fit the trend.
I was trying to be more general…I guess didn’t come across that way, maybe I got a little too nationalistic, I didn’t try to be.
My basic premise is that small/efficient cars, regardless of country of origin, intrinsically hold their value on average far better than large vehicles over time.
A large vehicle usually represents a greater MSRP and lower MPG than that of a smaller one. The older a car gets, the more a prospective buyer values not only the initial cost and operating costs (like fuel). Therefore we can assume (generally speaking) that smaller cars have a much higher residual value compared to its larger counterparts, even if they are cared for in identical manners.
Anywhoo, thats where my train of thought was going, when I suggested a reason why Japanese cars may be better cared for, or have the reputation of higher quality. Overall, I think Japanese manufacturers have had a much higher percentage of cars that ‘hit the sweet’ spot for resale compared to their NA cousins.
/I’ll catch you later on…I’m off for dinner and going to see a play downtown, have a good one.
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November 7th, 2008 at 4:31 pm
#83 N Riley
It’s like a lot of other things in life. You have to invest some time and money to keep things working as they should.
_____________
I agree. All of my US cars have lasted over 10 years. The 98′ trans am i drive now runs like new and i get 24mph/hwy w/it. It comes down to maintanence. Thats why i dont like buying used cars. You never know what the other driver did. A lot of of opinions on US cars vs Japanese cars comes from ignorance. People say “hope your car wasnt made on a Friday”, assuming it will be worst quaility. Japanese cars are made in the USA. US cars are made in Asia. Parts come from all over the world. I dont see how people can draw lines. Purchase what you like, and take care of it. Dont yell at GM or Toyota when your engine breaks down, but you didnt change the oil in 10,000 miles.
Also, some larger SUV’s and Trucks actually have better resale value than smaller cars. People that actually need those vehicles will buy them. Its sports cars that lose 50% of their value when u drive them off the lot. (but i dont plan on reselling mine
)
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November 7th, 2008 at 4:43 pm
Everyone I grew up with will never consider an American car. Those that bought Japanese cars loved them. And these weren’t new cars – they were all 5-10 years old at the time. When a random Japanese econobox clunker starts up flawlessly day after day, it makes a lifelong impression.
Even my college roommate was convinced when I got back from a break – he picked me up from the airport and predicted my gas would be stale, the battery would be dead … In fact, he was astonished that the thing fired up on the first impulse from the ignition. Now every other nonessential thing on that Honda was worn out or broken – but it ran and ran.
Then later his father picked out a Pontiac for him to take back to college. It didn’t even make it out of the state! He returned the car and said “I want a Honda like my roommate’s!”
This fine specimen Honda of mine was so rusted and messed up that my own father figured I’d never make it the 3000 miles across country to college (”Keep it under 60, you might make it to Detroit”). However, four years later it not just still ran (with little maintenance other than gas, tires and oil), I sold it to the next happy owner. Who in turn sold it and got another Honda.
My wife’s first car was a Ford Escort. Half the car was one model year, the other half was made from leftover cruft lying on the factory floor. It was 100% junk. Everything failed in creative ways. No replacement part fit.
Repeat those experiences for every one in my generation. American cars lost our trust. We didn’t care about looks. We had little money and Japanese cars ran forever. US car companies skated by for years on their reputation. Now that their loyal customers’ median age is 78 (j/k), and they never tried to resolve their quality problems, they are facing extinction.
Can’t say the writing hasn’t been on the wall for more than twenty years…
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November 7th, 2008 at 4:50 pm
Rashiid Amul #41
“They should all be crying. But they are probably remembering the big fat checks they are all going to get, whether or not their respective company fails”
*** *** ***
You’ve got that right, and the fact that they may all become employees of the Federal Gub’ment.
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November 7th, 2008 at 4:51 pm
#87 Lurtz Says:
November 7th, 2008 at 4:43 pm
Everyone I grew up with will never consider an American car.
etc..
_______________
It sounds like you didnt maintain your cars.
I think for every US car horror story, there is an equal an opposite Asian car horror story. Like i said, the parts come from everywhere, and are assembled by everyone.
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November 7th, 2008 at 4:58 pm
#89 You didn’t understand the story. We were all teenagers, and bought used cars that were already at the end of their lifetime.
Yes, my story is anecdotal, not data, but we all were turned off by how terrible the American cars were.
I only got interested in the Volt because of this site.
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November 7th, 2008 at 5:00 pm
#85 Statik
#86 kdawg
Agreed. I don’t like buying used cars either, kdawg. But a friend of mine won’t buy anything but used. Go figure. He does have luck with the used vehicles, but he could just be one of the lucky ones.
#87 Lurtz
Agree some with you, but not in all of it. We all have horror stories to tell and “magical” stories to tell. You never know.
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November 7th, 2008 at 5:06 pm
GM is evil and deserves to die. They pushed us further down the road of dependence on people who want to kill us by getting loopholes and favorable tax treatment for SUVs, basically creating demand from thin air for a product they knew was irresponsible. And then they lied about hybrids for years to try to delay the inevitable.
Die in a fire. Yesterday.
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November 7th, 2008 at 5:08 pm
#90 Lurtz
“Yes, my story is anecdotal, not data, but we all were turned off by how terrible the American cars were.”
—————
I have to admit it. There were times American cars were close to pieces of junk after only a couple of years. But, I am old enough to remember when Japanese vehicles were the same. The difference is the Japanese knew their products were inferior and worked to better them. And they did it, too. Some of the best cars and trucks ever made come from Japanese factories – some of which are right here in the good old USA. It is just a mind set the automaker has to get into and impart that same mind set to his employees. Everyone concerned in the company has to strive to produce the best vehicle sold. It can be done with American workers because it is being done by American workers. And, all of those American workers are not working for a Japanese automaker. Some of them build the Chevy Malibu.
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November 7th, 2008 at 5:08 pm
Now you guys are getting silly.
No doubt, how one takes care of their car is the most important factor in reliability of a car.
But anyone who says GM (or Ford or Chrysler) quality meets or beats Toyota or Honda quality is delusional . . period.
I’m not being a hater here, I’m just keeping it real.
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November 7th, 2008 at 5:09 pm
#87
I am retired from the machine tool industry [machine tools are machines that cut or shape metal] I have worked with spec regarding part to be manufactured and had to warrent my machine to produce said part to that spec. [in many cases that spec might be as tight as +/-.0002 of an inch. These companys made parts for american builders as well as foreign. The quality spec was NOT reduced for american cars. If you know anybody that works for companys such as TRW,GKN,Eaton, Getraug Gear,timkin, and the list goes on. ASK THEM ABOUT QUALITY OF PARTS FOR AMERICAN CARS.
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November 7th, 2008 at 5:27 pm
GM, start selling an EREV Cruze in Europe in 2009. Both the sedan and small SUV models. Start selling the Camaro in the USA in 2009, both big and small engine models. Start selling the plug in Vue in Northern locations and in Australia in 2009.
I earn less than $50,000 a year and even I, with my small brain, can come up with a doable plan.
GM, start taking Volt deposits now. You must play to win or you will not win.
=D~
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November 7th, 2008 at 5:50 pm
IYCSANJDSAAA
I yearn calmly since americans need just desserts screamed at a-hole automakers?
In your can stupid a$$ nerds. Just don’t say another annoying anecdote?
If you can see a ninja, just don’t stand alone and avenge?
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November 7th, 2008 at 6:01 pm
IYCSANJDSAAA
I yodel clearly, said a nun. Just don’t stop and ask about abstinence.
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November 7th, 2008 at 6:11 pm
whoops — extra “a” — 5 point conjunction penalty
but I’ll give myself a 5 point bonus for innuendo
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November 7th, 2008 at 6:16 pm
innuendo (snicker snicker)
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November 7th, 2008 at 6:18 pm
#61 Rashiid Amul:
I was specifically referring to the lack of savings. We have an appalling lack of savings in this country. I think anyone who finds themselves rolling into this huge recession and possibly worse, with no cash savings really f’d up.
It lacks the same sort of culpability as the corporations and governments share, but when you have that “oh, carp” moment when you realize you didn’t position yourself very well you feel like you f’d up, all right.
I know I did.
Although I think I’ve managed to pull everything together, now, and I’m back in a pretty strong position (I got a little lucky).
But part of that, too, is that I didn’t go out very far on a limb. I remember my friends laughing at me for getting a 30 year mortgage in ‘04 for 2% higher than what ARMs were going for. Everyone I know went nuts for those things when the interest rate was the lowest it has ever been in my lifetime. It seemed like a bad idea to not lock in the lowest rate in your lifetime, and a really, really, REALLY bad idea to depend on that rate to stay low enough for you to refinance, given the liklihood that rising interest rates would also hurt house prices, and therefore your ability to refinance. Which is exactly what just happened on a massive scale.
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November 7th, 2008 at 6:24 pm
Never thought about it, but innuendo is kind of an innuendo.
Beavis: “He said innuendo.”
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November 7th, 2008 at 6:30 pm
Just to throw my 2 cents in here on American vs Foreign cars. My wife and I are currently looking for a new car for our expanding family. We currently own a Toyota Corolla and are looking for something a little bigger, mostly so that we can fit two car seats into the back without me eating dash (I’m 6′4″). I have been reading Consumer Reports and other info sites in a lot of detail for a good car to buy and most of the cars at the top are Japanese (Honda, Toyota or Subaru). I had read in one report that Ford’s quality now rivals Toyota, something that I had trouble believing after seeing my dad’s truck fall apart in interesting ways (despite regular maintenance and proper care, etc, N Riley and OldMan). The Escape looks decent, but having test driven a Subaru Forester and Toyota RAV4 the Escape feels really mushy for steering and braking. I suppose that’s my biggest problem with American cars besides the supposed reliability: every American car I’ve driven (mostly rentals) feels really sloppy on the road. Maybe it’s just my personal preference, but having tight steering and responsive brakes makes me feel safer because it makes me feel like I have control of the vehicle as opposed to piloting a boat. It also doesn’t help that a nice AWD Forester is about $22k while something like the AWD Saturn VUE starts at $26k.
Anyways, to get somewhat back on topic, the Volt is really exciting to see making progress; I just wish that Detroit had had the balls and brains to go down this path before it was in crisis mode. It seems like Detroit has been especially good at destroying all of their long-term research in the name of short-term profits…
Derek
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November 7th, 2008 at 6:34 pm
Let’s keep it real. Those who didn’t maintain their car whether it is US or Foreign found that a smaller percent of the Foreign cars had better results than the US. Then a person makes the decision of “Do I want a car I have to maintain and/or baby or one I can deprive/ignore and keeps running.”…
Hmmm….
Decisions decisions…
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November 7th, 2008 at 6:38 pm
Sounds like Capt. Jack’s been hangin’ out with Capt. Morgan.
Maybe I’ll understand it when I get back from happy hour
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November 7th, 2008 at 6:40 pm
Just waitin for the Budweiser girls to come over now….
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November 7th, 2008 at 6:44 pm
#59 statik:
Here’s more of the flipside. Let’s talk bankruptcy for a moment before we talk about bailout, because you gotta know what your risks are before you start talking about what to do about it.
Presumably GM will file for Chapter 11 bankruptcy protection. Then the courts will analyze the business and debts.
Here’s what I understand (and I think I’ve mentioned before that I’m sort of crash coursing in econ, I’m a circuit designer by trade
If the debt of the company exceeds the assets they will very likely just obliterate the current shareholders and hand out new shares to the current creditors.
(Note to #19 Campy and to those asking about what happens to current shareholders. I think the debt position is such that current shareholders could very well get NOTHING. You should really check out the debt levels vs. assets)
However, this assumes the company is making money or has plans that could reasonably be expected to make money.
Does GM have such a thing? What is the timeframe? As you’ve said they have no real way to make money for years. If they can’t make an argument to the courts that they somehow can actually provide value for their new stockholders (ie, the current creditors which also have to sign off on the plan), they’ll simply drop into Chapter 7. End of game, finito.
Do you think the financials and business plans are strong enough to keep them out of Chapter 7 at the present time?
I have serious doubts that would be true!
I suppose what it boils down to is keeping them afloat long enough to avoid chapter 7. That means keeping them afloat long enough for their sales to pick up somewhat, which won’t happen until they can get lending in order again and get some cars out that people want. If they don’t get cars out that people want, they will go chapter 7 anway. The government (being all powerful
can place itself at the front of the line at that point for a return of their bailout funds. 
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November 7th, 2008 at 6:47 pm
Dave K.> GM, start taking Volt deposits now
Well that is the thing, with the current state of GM I would no longer be willing to give a deposit for the Volt although 6 months ago I have been willing to put down a couple thousand.
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November 7th, 2008 at 6:49 pm
@DaveP
Dude, your scary..
Do you think If I went and bought a new GM big truck and financed through GM that when they either go bankrupt or close down, I wouldn’t have to pay for the car anymore?
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November 7th, 2008 at 6:49 pm
#106 Cpt. Jack,
Here’s a joke to break the ice when one of the little honeys comes over:
After the North American Beer Festival, all the brewery presidents decided to go out for a beer.
The guy from Corona sits down and says, “Hey Señor, I would like the world’s best beer, a Corona.”
The bartender dusts off a bottle from the shelf and gives it to him.
The guy from Budweiser says, “I’d like the best beer in the world, give me ‘The King of Beers,’ a Budweiser.”
The bartender gives him one.
The guy from Coors says, “I’d like the only beer made with Rocky Mountain spring water, give me a Coors.” He gets it.
The guy from Molson sits down and says, “Give me a Coke.”
The bartender is a little taken aback, but gives him what he ordered.
The other brewery presidents look over at him and ask, “Why aren’t you drinking a Molson’s?”
The Molson president replies, “Well, I figured if you guys aren’t drinking beer, neither would I.”
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November 7th, 2008 at 6:52 pm
lol…..
Maaan, they’d slap me for that one….or is that Spank?
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November 7th, 2008 at 6:54 pm
By the way, I don’t know if I missed a thread talking about this, but Tesla may very well be on death’s door as well:
http://www.reuters.com/article/marketsNews/idUSN3130815920081031?pageNumber=2&virtualBrandChannel=10339&sp=true
http://www.greentechmedia.com/articles/tesla-ceo-denies-bankruptcy-rumors-seeks-20m-5098.html
They’re down to just 9 million in cash. There’s been a lot of buzz around the valley that they haven’t been able to get any financing and are just about done. I haven’t heard anything more about their quest for money. They also trying to get some money from the government as well (the DOE as well as part of that $25 billion congress has approved for making electric vehicles) since they haven’t been able to get anything from the busted banking system.
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November 7th, 2008 at 6:56 pm
DaveP # 101
I understand now.
I did what you did back in 2003. I went fixed 30 year at 5.37% and I am still happy with that. I can pay off my house in 2 months, but have decided not to due to the economic climate. Like you, I want a sizable cushion just in case my family needs to eat.
My wife is a miser, thank goodness. So we’re good for the long term.
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November 7th, 2008 at 6:56 pm
Derek #103,
I’ve had my 2007 Forester for about 18 months now and I absolutely love it. Having owned a Chevy and 2 Chryslers prior, I am honestly amazed by the Subaru. It gets better mileage than my Stratus ever did… better than advertised on the sticker even. It handles like a race car in the corners, rides smooth as silk on road trips and powers through the snow like a pack of timber wolves. The only gripe is that the back seat is a bit on the small side. After having “Bought American” for so long I honestly didn’t know a car could be this good. If you decide on the Forester, I’m sure you’ll have no regrets. I recommend the premium package.
I have to agree with Lurtz. I see no reason why it should be my responsibility to buy an inferior American product. We’re supposed to have Capitalism here. If you can’t make a decent car, I’ll buy from the competition. The only reason I care about GM is because of the Volt. But now it’s made a big enough splash that other mfgs will be making EREVs soon enough. Unless there is Chapter 11 restructuring, GM’s culture will never change. Let bad companies die. It’s the American way.
Hopefully my next car will be electric, regardless of who builds it.
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November 7th, 2008 at 7:02 pm
Lurtz #90.
I hear you. My first brand new car was a complete piece of junk 1986 Pontiac Sunbird. Then I bought a 1991 Honda Civic.
In 2000 I bought a Subaru Outback. That car also turned out to be piece of junk. I married into a 1992 Nissan Sentra. In 2002 I bought a Hyundai Elantra.
The Honda, Nissan, and Hyundai all went over 150,000 miles.
I have the Hyundai now at 175,000 and still going strong. I predict 300,000 miles out of this car. All for $13.5K out the door in 2002.
GM, or any American made car for that matter, was off my list.
Subaru too.
The Volt changed everything. I want one and eventually will get one. I have become a supporter of GM because of the Volt.
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November 7th, 2008 at 7:04 pm
My next car will be electric. If it’s not the Volt it’s going to be my 97 Saturn SL2 converted to eletric. I can’t stand dumping my $$$ into foreign Oil and “Fat Cat” profits. Someone needs to come up with good affordable ways to convert cars to electric. There are many but it costs as much as a new car to convert one. Remember, I said “affordable”.
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November 7th, 2008 at 7:10 pm
Das V Danya Comrads, GM should get the money from the Bushkovites they deserve the money just as much as the cronies at Hal Burton and the crooks in the stock market. Then when the Republicanistas end game is done and the U.S. destruction is complete get out of the U.S. market and concentrate on China and India where the future is. This all started with Regan and ended with Bush we are done for the end game is on the way good luck comrades we will need it, Good luck buying a loaf of bread for less than a 100 Bush bucks when these clowns get through with us.
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November 7th, 2008 at 7:11 pm
#109 CaptJackSparrow:
Ha! That might pick up sales. I could see the campaign, now: “Buy a GM car or truck on a GMAC loan and if we go bankrupt you can keep it for free!!”
Sadly, that’s not how it would work, of course, the strongest asset they have (or have 49% of, now) are those loans. Somebody would buy them for sure.
Sorry I’ve become so gloomy. Holy cow, I just realized I’ve become gloomier than statik! I’d better go home and relax. I blame the 15% reduction in size of Dreyer’s ice cream containers for my gloom.
I’ve also noticed that now my Irish Spring bath sized bars are now 4.0 oz instead of 4.5 oz. (They’re still in the same sized boxes, however!). Great. Now I can be thinner, grumpier and 11% smellier.
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November 7th, 2008 at 7:12 pm
#6 Daniel says a bailout is just plain wrong and the government should not bailout GM.
“““““““““““““““““““““““““““““““““““
I agree about a bailout, BUT the plan is for the government to secure a LOAN for the auto makers, not a BAILOUT. There’s a big difference! Similar to the loan to Chrysler years ago, and Chrysler repaid the LOAN ahead of schedule. I see nothing at all wrong with setting up a LOAN. A LOAN that will save thousands of jobs that would ripple through the entire nation and bring our economy down far more than it is now. It’s not only GM, it’s all of GM’s suppliers as well!
So again, a LOAN is NOT a BAILOUT. Put your short term conservative hat in the closet and look hard at the Big Picture.
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November 7th, 2008 at 7:13 pm
#116 Cpt Jack,
The Black Pearl is wind powered.
Your teeth are inflation/recession proof.
No worries.
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November 7th, 2008 at 7:15 pm
Welll…
At least your not in California where the Governator is raising taxes up an additional 1.5cents, fuloughing State employees and taking away 2 holidays. Yeah, we’re screwed and the Bud girls aren’t here yet….
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November 7th, 2008 at 7:15 pm
OK. I got through about half of the posts on this thread so I might be duplicating effort.
-Ch 11 or OOB means a lot more jobs than the couple hundred thousand at GM. Not nearly as many as the Car lobbying suggests, but still a LOT.
-Shareholders and bond holders will likely lose all value in nearly any scenario. Perhaps the Feds would bailout and avoid this but I doubt it.
-For those that don’t care about the jobs now and in the future, the retirees, or the suppliers. How about the industry? Do you want to depend on Japan, China, and Germany to build the tanks, Humvees, etc that will be needed if a “real” war occurs. I am not much of an alarmist but the near term world economy that we are currently staring at greatly increases the risk of such an event.
-Would you buy a car from a company in Ch 11?
Like it or not, we need the industry. Perhaps it means wiping out GM’s investors and everyone (managment, unions, credit holders, and suppliers) taking a hit. I think something can be worked out with the geovernment that is like a “soft” bankruptcy but I certainly don’t trust Nancy Pelosi to negotiate this for us taxpayers.
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November 7th, 2008 at 7:16 pm
I meant “furlough”….
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November 7th, 2008 at 7:21 pm
Facing off against Ahnald AND no Bud girls for support. Ok, you’ve got problems.
Time to whip out the trusty pirate flask.
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November 7th, 2008 at 7:22 pm
“Would you buy a car from a company in Ch 11?”
Heck there are people who will and won’t even research the company they are buying from. He11, they voted a guy by the name “Barack Hussein Osama” who can’t even pass Mititary security clearnce and has an aunt here in the US ILLEGALLY!
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November 7th, 2008 at 7:23 pm
#107 DaveP said “Do you think the financials and business plans are strong enough to keep them out of Chapter 7 at the present time?
I have serious doubts that would be true!”
=====================================
Trying to look at their dire situation in a more positive way, I do see considerable strength:
1) Even in this bad year, they have sold more vehicles in the US than anyone else. Notwithstanding all the negatives in comments above, GM has sold many more than Honda.
2) GM truck sales alone are hundreds of thousands of units a year. This market is not going to go away.
3) GM outside the US has strong brands and a strong presence.
GM has been weighed down by debt and labor agreements from past years. If that was gone via bankruptcy, I think a restructured company could quickly be viable.
Eventually there will be once again some strong years. In a way, down years simply put sales in the bank, as customers will come back once there is a better outlook and better financing.
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November 7th, 2008 at 7:27 pm
@Frank B
Don forget to mention that they don’t have to start paying back till 5 years have past. That’s “One special” loan there buddy. Some people also call it “Under the table…”, “Pat on the back for screwing up…” or “Reward the morons”.
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November 7th, 2008 at 7:28 pm
Has anyone even stopped to wonder why they are closing US plants and not their “Overseas operations”?
Sure, lets give them a big fat laon to fund overseas too!
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November 7th, 2008 at 7:34 pm
#90 Lurtz — regarding Hondas.
===================================
I agree with you that Hondas are very nice well executed cars. I have two of them. But, I also have two GM vehicles, a car and a truck. They are very nice also. None are trouble free, and all work well when maintained well. I think you might look around again when you can do so with an open mind.
Regarding Honda, I think of them as almost as American as GM. Of course the Honda corporate HQ is in Japan, but Honda designs are principally for the US, much of the assembly is in the US, and the majority of Honda sales are US. Thinking of Honda as a US company is no different from thinking of Opel as a European company. The reality is that all the big companies are extensively international. So when you say you want Honda rather than US, to me it is a distinction without very much of a difference.
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November 7th, 2008 at 7:39 pm
#98 carcus — That’s awesome! (I’ll give you an A for it )
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November 7th, 2008 at 7:40 pm
@RB
That’s funny. Honda with better quality and still profitable on a sale of a vehicle and they are built in the US. But GM can’t do the same. Well, we know it’s not the US employees. Did I also mention they’re not UNION!
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November 7th, 2008 at 7:43 pm
IYCSANJDSAAA
If you can, said a nother, just do so and always advance.
“a nother” ho ho ho
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November 7th, 2008 at 7:44 pm
#113 Rashiid Amul:
I’m glad to hear you’re in good shape.
Good luck to us all!
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November 7th, 2008 at 7:46 pm
I can only add two comments;
I would love for the Chevy Volt to be out NOW and having been around the last 20 years and observed GM produce a Hybrid back in ‘93 there’s no reason it couldn’t.
But I would not buy a car from a company that by all measures will be out of business when I go to have it fixed under the warranty.
THINK GM, get the darn car out NOW!!!!!
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November 7th, 2008 at 7:49 pm
#130 RB,
Thanks. A little nun humor is funny as long as it doesn’t become a “habit”.
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November 7th, 2008 at 8:00 pm
Nice Picture!!!
How much did those champaign classes cost?
How much did they have to pay in catering cost to set that table?
Is that what it looks like to be in “survival” mode?
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November 7th, 2008 at 8:03 pm
How much was the stripper they’re all smiling at?
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November 7th, 2008 at 8:12 pm
#131 CaptJackSparrow said
“That’s funny. Honda with better quality and still profitable on a sale of a vehicle and they are built in the US. But GM can’t do the same. Well, we know it’s not the US employees. Did I also mention they’re not UNION!”
===========================
It does show what a huge difference is made by careful and able management, a focused company, and more cooperation between levels. Did you know that Honda warranty calls from a dealership’s service department go directly to the assembly line, for cars still being manufactured, so that any observed defects in the field are immediately fixed on cars being assembled? Honda is admirable in giving attention to every little thing, with US dealers, workers, and assembly lines. People in the USA do great work when given the chance. GM has greatly improved in this respect, and I like my GM vehicles, but maybe GM is not quite there yet.
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November 7th, 2008 at 8:15 pm
No wait,. Secretary Paulson got up (you can see his empty chair on the right) bent over and mooned the table while taking a blackberry picture behind his back. It was hilarious!
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November 7th, 2008 at 8:19 pm
Capt Jack said:
Has anyone even stopped to wonder why they are closing US plants and not their “Overseas operations”?
Sure, lets give them a big fat laon to fund overseas too!
————————————————————————
Well, in general, the overseas operations actually turn a profit…
Ford too. Ford looks to be in just as deep a hole as GM and could run out of cash by April/May. But Ford of Europe turned a profit again this quarter despite lower volumes.
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November 7th, 2008 at 8:21 pm
In the early part of this decade, Washington gave Detroit $1 billion to develop hybrid vehicles. Toyota and Honda got nothing. Yet, by 2004, the Japanese had 3 hybrids on the market.
________________________________________
Whoa! Those dates are way off. Here’s a quick history recap…
Clinton/Gore established PNGV back in 1993 to fund Big-3 research to develop 80 MPG cars ($170 million per year for 10 years). Foreign automakers were denied the opportunity to join in. Toyota, worried they would have no way to compete, found their path to success. They surprised the world with the debut of Prius on Oct 1997. But wasn’t a prototype, which the PNGV project wasn’t even scheduled to deliver until 2001. It was the actual production model, ready to be sold. Sales began Dec 1997. Honda followed with their first hybrid 2 years later.
By 2002, there was no word of any domestic competition and gas was less than $1 per gallon. Bush/Cheney quietly pulled the plug on PNGV in favor of a hydrogen initiative without deliverables for 15 years. It was a move that simply made no sense even back then, and now it is turning out to be a horrible decision with dire consequences. They killed the development funding, but none of those automakers cared. They embraced guzzling trucks instead.
Now we’re rapidly approaching 2009 with absolutely no idea how GM or Ford can survive. Cash reverses are disappearing fast and they still have nothing competitive to sell. What in the world is going to happen?
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November 7th, 2008 at 8:37 pm
#94 Carcus
“But anyone who says GM (or Ford or Chrysler) quality meets or beats Toyota or Honda quality is delusional . . period.”
Then call me dilusional. The Big 3 chose their markets, and it wasn’t small cars, it was trucks and SUV’s. And in those markets, GM quality beats Honda and Toymota hands down.
Go drive a new Tahoe with all the goodies (auto suspension). It is more quiet and rides better than any car from Asia, and will last longer as well. The problem, it uses too much gas in an economy where the gas prices increase 40% per year!
Want performance, go check out the new ZR1 Corvette. It’s $100k, but will suck the doors off the Porshes, Ferraris, etc. at 3 or 4 times the price. Yet it gets better gas mileage than a Toymota Land Cruiser.
Just because the shitboxes that kids drive with their fart can mufflers outlast an old Cavalier, doesn’t mean that applies to all the vehicles from GM.
Sorry to hurt your feelings, junior.
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November 7th, 2008 at 8:39 pm
#141 John,
“Now we’re rapidly approaching 2009 with absolutely no idea how GM or Ford can survive. Cash reverses are disappearing fast and they still have nothing competitive to sell. What in the world is going to happen?”
______________________________________________________
Hey I’ve got it! Let’s send the military into Iraq, turn it into a thriving Democracy, and get the oil flowing like poetry. We’ll be right back to business as usual!
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November 7th, 2008 at 8:54 pm
#142 Bill R
It’s not just me. Kelley Blue Book (resale values, consumer ratings) thinks you’re delusional as well.
Pick anything comparable that’s say 5 or 8 years old from Toyota/Honda vs. big 3. i.e. 2001 Malibu vs. 2001 Camry. 9 times out of 10 the Toyota/Honda product will have higher resale value and consumer ratings.
http://www.kbb.com/kbb/UsedCars/default.aspx
You didn’t hurt my feelings, kid. I was pulling trannies while you were still pooping in your jammies.
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November 7th, 2008 at 9:11 pm
#142,
GM quality is better now than it was 10 years ago, I’ll give you that.
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November 7th, 2008 at 9:22 pm
It sure is not looking good. Here is a video talking about their financial problems:
http://www.cnbc.com/id/15840232?video=922748812&play=1
Looks like GM could be running out of cash by the end of this quarter! This is an extremely serious situation. Bankruptcy is just a shake of a congressmen’s head away. Yeah, it’s that bad. GM has their hat in hand.
Mr. Wagoner says they have absolutely no plans for bankruptcy but I think they better start at least working up something. I’m sure he is just saying that so congress will feel obligated to sign the papers but I hope we have the smartest people in our country working out the different options to see what is best.
It’s easy to just say, “let them go under!” but how about we really look at the consequences deeply. Maybe we should be saying, “I have no idea what to do, let’s get the best and brightest to dig deeply into it.”
Whatever happens I don’t see the cash burn rate slowing down for the big three anything soon. I’m thinking at least 2 more years at least. They will need to severely downsize and refocus operations. People think you can just turn off the switch but it costs tons of money to kill a brand and shut down plants. Contracts, paying displaced workers, etc. Very expensive.
I’m guessing soon Mr. Wagoner is going to be slashing things like crazy. Does he have a choice? Pontiac? Slash. Buick? Good bye. Seriously, how many luxury brands are going to be needed in the new global market? BMW, Mercedes, etc. are all at around 50% capacity. Until we get fully electric and non-fossil fuel burning vehicles in the showrooms it’s downright irresponsible to be putting more petrol burning cars on the roads. We need to start a hard transition now. Unfortunately, we don’t have anything for the substitution. Thus, people are wisely staying with their old vehicles. Things are not looking good at all.
Maybe this will get governments to ease up on safety regulations and subsidies so we can get what we have available (Think, hybrids, NEV, etc.) on the roads as quickly as possible.
Will there be time for the Volt? I don’t know but the technology is surely needed. The plug-in concept is a true transitional technology that can have a big impact on our petroleum use. I just can’t think of too many projects we should put more priority to. Electrical storage, solar, biofuels, EVs, plug-in hybrids, etc. Top priority!
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November 7th, 2008 at 9:52 pm
My new theory is this:
GM wants the union and government to acknowledge that the current business model is unsustainable. If I was the CEO, I’d ask the union for a plan to fix things.
GM will file for bankruptcy to restructure (not liquidate). It will appear bureaucratic and slow, but in reality the executives are playing their cards by first getting the country to understand that it’s inevitable.
The airlines did it, and they’re still around.
death to oil
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November 7th, 2008 at 10:07 pm
I have little faith that GM as now structured with all of its liabilities could make money for at a minimum another 3 years if ever. I fear a bail out will result in a less competitive company still stuggling to turn a profit whereas a company emerging from Chapter 11 bankruptcy might have a fighting chance.
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November 7th, 2008 at 10:44 pm
CaptJackSparrow # 137,
“How much was the stripper they’re all smiling at?”
___________________________
Judge to prostitute, ‘So when did you realize you had been raped?’
Prostitute, wiping away tears, ‘When the check bounced.
___________________________
Let’s get some sellable cars to the market Rick.
http://garfwod.250free.com/camaro_2009.jpg
If GM can sell the Volt for $30,000 after tax credit then I’m in. I have a $5000 deposit for you right now.
=D~
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November 7th, 2008 at 10:57 pm
#126 RB:
Good points, all.
I guess what makes me so gloomy is that banking problem and cash hoarding that is going on. Look at Cerberus Capital Management. They gleefully picked up money bleeding Chrysler and were OK with that… Until things god bad in the financial sector. They’re private so we can only guess what is going on but I suspect that suddenly the prospect of owning any kind of entity that was burning your precious cash looked extremely perilous. Now they’re willing to dump Chrysler at almost any loss if they can just get some CASH out of the deal… GM’s prospective new owners (their current creditors) may likely feel the same way. They may just vote to get the cash from the assets to solve THEIR current cash problems, NOW, no matter how much the restructured company is worth, later.
I leave with this quote from Wagoner which may be hinting at what I am saying (or he may just be worried about losing his job, who knows
:
‘GM Chairman and CEO Rick Wagoner said the company will “take every action” possible to avoid bankruptcy.
“We’re convinced that the consequences of bankruptcy would be dire,” he said, adding that the company would use every source of potential funding. “We need to find a way to get through this, and that’s really our focus,” he said.’
http://news.yahoo.com/s/ap/20081108/ap_on_bi_ge/earns_autos;_ylt=Asp6MsLNZxxd7e3xTdFmp9as0NUE
He is definitely not sounding encouraging about coming out of bankruptcy as a stronger and more viable company.
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November 8th, 2008 at 12:18 am
#103 Derek: We used to have a Corolla; now we have a Mini Cooper. I’m 6′, and have two kids in the back (5 and 2, one in a booster and one in a car seat). I don’t know how your extra 4″ would work out (are you all leg, f’rinstance), but I can push the driver’s seat so far back I can’t touch the pedals. OK, I’m not actually suggesting you’d be happy with a Mini Cooper or even a Clubman, but I was surprised that I fit well. I did notice that the Mazda5 was a nonstarter – driver’s seat all the way back and I was still eating dash.
#129 RB: The Volt is the only reason I’m here. And I have no beef with American workers – our previous car was a Toyota built at NUMMI in Fremont, California.
BTW, you libertarian Ron Paulian “Fiat Money!!11!one1″ kooks on this board, I don’t think unions are a problem. The American social contract we’ve enjoyed since WW2 makes us uncompetitive with the even more unionized Japanese and Europeans, in that health care and retirement benefits are part of the price tag of American cars. Several THOUSAND DOLLARS worth, in fact. Let’s get American corporations out of the health care and retirement business. A smaller GM will not be more nimble because its retiree + retiree health obligations don’t shrink.
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November 8th, 2008 at 12:35 am
I think post 147 (Anti-Oil says) hit the nail on the head. Bankruptcy will be good. The current model is toast.
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November 8th, 2008 at 12:45 am
The Volt must come!!!
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November 8th, 2008 at 1:29 am
I drive an american car with 220k on it right now.
IT cost me $0.00 dollars in repairs in 4 years.
I am going to be blunt because there are a lot of people here who are not that bright.
- People who say foreign cars are better are stupid.
- People who do not want to support our US industry are stupid.
- People who do not support our industry will have worse jobs for there kids and on top of that harm there retirement.
- IF you let GM go bankrupt you just wait to what happens to the stock market.
- Why are people complaining about there tax dollars to save their future. Again stupid ignorant people.
Oh and the person here who said GM produces boring cars. I rented a brand new Mercedes and then a cadillac CTS. I found the cadillac CTS much better.
I also like the new malibu better than the camery and I can go on of how much better american product are than foreign.
God bless American, God Bless our new President and God Bless GM
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November 8th, 2008 at 2:34 am
Bill Cosworth #129
You’ve said a lot Bill some of it true and some not so true. Your right about US customers needing to buy GM and American products in general.
GM must produce high quality products at competitive prices or customers will buy Asian. Our system of unions has encumbered American industries too long and we need laws to rescue workers from themselves. When the parking lots at American car plants are half filled with Asian cars, that says a lot. (the latest Boeing strike is a prime example)
US cars must continue to get better and cheaper. Too many buyers remember cars like the Chevette. Management was stonewalled by the unions when they tried to use robotics in auto production to produce better cars but this didn’t happen in Japan or other Asian factories.
So the quality of American cars has finally turned around but the legacy of bad cars lives on. It didn’t have to be this way but we did it to ourselves.
There were plenty of omens along the way when the steel and textile industries started disappearing because they could no longer compete. Did government or the unions do anything to correct this ? Well that’s a big fat NO !
We can’t compete at our current manufacturing cost levels. And few on this site are willing to buy a Volt at its true development and production cost. So if the Government subsidizes these costs then they might buy otherwise it will be Asian and more jobs lost.
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November 8th, 2008 at 3:03 am
Tony Gray 46
“This goes back to insane government interference in the credit markets, allowing (forcing?) credit upon folks…”
What on earth…? Take a look back at the lack of any kind of Govt interference and which of the mortgage brokers and banks(now mostly bankrupt) were doing the forcing.
Well, at least you have the spending priorities right. Most folks seemed to be living pay check to pay check and using home equity as a piggy bank. God only knows what they’re doing now to survive.
DaveP 107
GM in Chapter 11 would shrink down to a size where they could run a self sustainable business for the short term anyway, assuming they could accelerate pushing their pension obligations onto others. GM just coming to a dead stop would be horrific for an already horrible economy, but maybe in chapter 11 the new GM could change direction
Loss of GM could mean employees, suppliers, dealers etc, of up to a million jobs lost and then the ripple effects of all those additional jobs that depended on the incomes of all of those people. Hitting all at once in a still sinking economy would have the effect of an economic tidal wave.
Derek 103
Are you the Derek w/ the $100,000 sound system and the 6k Corolla? If so hows it goin’, if not no offense!
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November 8th, 2008 at 3:12 am
hi Jeffhre #146,
“Loss of GM could mean employees, suppliers, dealers etc, of up to a million jobs lost and then the ripple effects of all those additional jobs that depended on the incomes of all of those people. Hitting all at once in a still sinking economy would have the effect of an economic tidal wave.”
___________________________
Actually, more like a fat boy cannon ball off the medium board.
=D~
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November 8th, 2008 at 3:14 am
john1701a
I firmly believe that the hydrogen car program did exactly what it was supposed to do. It allowed big oil to appear to have a plan for the future. Just as clean coal is a code word for don’t bother us now, we’re working on it and we’ll get to it as soon as we can.
Dave K
Depends on how close you’re standing to the edge in your dry-clean-only linen suit.
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November 8th, 2008 at 3:30 am
Delusional that American cars aren’t up to Toyota and Honda! I own 3 Buick Regals – all are exceptional, they never break.
Back to GM woes. My thoughts are on the dismal failure of the markets to work in the face of greed, oil and otherwise. Congress agreed to give banks $700 billion dollars. Unbelievably, Congress, one party in particular, fought to make sure no CEO caps were included. We now learn 1 of every 10 dollars will go to CEO and executive pay and bonuses. That $70 billion dollars could have bought every one in America a Chevy Volt. Where are our priorities as a nation. Give our taxpayer money to Oil, the banks, and to the other fine hero worship Captains of Industry of ours. We’ve been duped.
Dear Congress help GM in helping America free us of the harbinger of Oil addiction.
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November 8th, 2008 at 6:39 am
http://garfwod.250free.com/Photos/Volt%20New.jpg
=D~
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November 8th, 2008 at 7:16 am
Ad here on gm-volt, today
Pre-Order the Chevy Volt
Chevy’s 1st Plug-in Hybrid that can go 640 miles without re-fueling
http://www.ChrisLeithChevy.com
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November 8th, 2008 at 7:30 am
#90 Lurtz said ” You didn’t understand the story. We were all teenagers, and bought used cars that were already at the end of their lifetime.
Yes, my story is anecdotal, not data, but we all were turned off by how terrible the American cars were.”
=============================================
Teenagers are famous for their herd behavior. They are well described by the saying “it is better to be dead than out of style”. The favorite narrative of teenagers is how much smarter they are than their parents.
So I agree that a serious problem for GM is in its lack of favor with younger people. I’m not sure how it has to do with the vehicles themselves, or their reliability, or any other objective characteristic. No one has accused teens of being fact based in their judgments.
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November 8th, 2008 at 8:18 am
#14,
What kind of war do you already think we are in? We are in an oil war. But it is an oil war disguised as a war for “freedom” so that the sheep would accept it.
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November 8th, 2008 at 8:32 am
Hope the traders that drove the price of oil to new highs on PURE speculation are happy with the economic mess they created.
Expensive oil, makes everything else expensive, and going up 150% in 12 months is enough to destroy an economy as we can obviously see.
Isn’t deregulation and Enron loopholes great for the economy?
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November 8th, 2008 at 9:03 am
#159 jbfalaska,
Glad you like your Buick Regals. But if you want to add a new one to your fleet it’s going to say made in China. ( U.S manufacturing stopped in 1987, Canadian production stopped in 2004).
http://www.autoblog.com/category/china/
http://en.wikipedia.org/wiki/Buick_Regal
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November 8th, 2008 at 9:42 am
#163 joe “But it is an oil war disguised as a war for “freedom” so that the sheep would accept it.”
==============================================
How would you describe Afghanistan?
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November 8th, 2008 at 9:55 am
#154 Bill Cosworth
Thank you. You have said many things I would also say.
Many don’t realize that only about 3% of the cars in Japan are imported. And that’s not GM’s share, that’s the total! Japan is a protectionist country, and levies large duties on imports.
In summary, they don’t have fair trade practices.
Twenty years ago while in British Columbia, I noticed a ship being loaded with logs. A gentleman explained that they were being shipped to Japan. Although Canada could make paper and ship it to Japan, they only wanted logs so to support their own, uncompetitive paper industry.
Conclusion, they don’t want to support your economy.
Now for those who think the only news is in the mainstream media. Again, about 20 years ago when George Bush Sr. was president, there was big trouble in Alaska. As it turned out, the Japanese had been buying all the canneries in the region. When they bought the last cannery, they halved the prices for Salmon. The fisherman revolted and refused to sell to the canneries. This never made the mainstream media.
Several months later, George Bush was on the mainstream media looking to stop floating canneries from coming to Alaska. He said they were taking away American jobs. I guess we don’t care about the fishermen.
Synopsis: The Japanese don’t really care about the welfare of everyday Americans.
So you sheeple keep buying your Toyondasans, and let GM and other vital industries go bankrupt. Say goodbye to more domestic jobs and opportunites, and see where our country ends up. You are seeing the effects in the banking industry as we speak.
But as Bill Cosworth mentions, you are probably just too stupid to get it.
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November 8th, 2008 at 9:58 am
#154 Bill, I think it’s a little over the top to say that people who prefer foreign cars are stupid. I have a 2002 Corolla with 75k and a 1991 Camry wagon with 150k on it and both run very well with only the recommended maintenance and oil changes. My dad had a 1992 Ford F350 that he maintained just as well as I maintained my cars and there was always something wrong with it. One time the fuel pump died, another time the starter died, ad nauseum. I definitely agree that American quality has improved, which is why we’re considering the Ford Escape. We had looked at the Saturn VUE, but if you can’t tell from my current vehicles my wife and I are pretty frugal and the VUE is significantly more for the base model with things we don’t want or need than something like the Forester or RAV4. As someone already said, quality control has been something the Japanese (and now Koreans) have been working very hard at for *for decades*. American car makers are just now catching up based on everything I’ve read in places like Consumer Reports, Car & Driver, etc. My friends who used to own GM and Ford have bought Hyundais, Kias, Toyotas, etc and when I mentioned looking for a new car they have all talked about how they had this or that happen with their old cars but their new cars run like champs. I concede that it’s hard to overcome that image even when Detroit’s latest vehicles are definitely better in quality; that’s another reason I think that Detroit has majorly shot itself in the foot with short-term thinking for many, many years.
In my particular case I want a practical vehicle that gets good mileage, is easy to maintain, doesn’t drive like a boat and doesn’t cost a lot. I could care less about voice activated radios (WTF Ford?), OnStar, superbad sounds systems (I’m not the $100k sound system Derek), etc. I really want to buy American but after hours spent reading Consumer Reports as well as the websites of the automakers themselves, I get the distinct impression that Detroit doesn’t want me to buy American.
I’m hoping that my wife and I like the Escape when we test drive one next week, but I’m not going to spend extra money on a car I don’t want when other manufacturers have made one that I do want for less.
Cheers,
Derek
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November 8th, 2008 at 10:13 am
As the company sinks, Wagonner continues to suck off over $1 million per month! How about maximizing executive pay at $1 million per year. Are these a**holes really trying to save GM?
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November 8th, 2008 at 10:27 am
Why is Red Ink Rick still in charge?
What the hell are the board smoking?
Gas coming down to $2 – nice timing for the Volt, huh, Bob?
GM’s got some awesome leadership.
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November 8th, 2008 at 10:41 am
#42 DaveP wrote:
“I’ve said, before, GM is just a canary in our coal mine of the economy.”…..“Without massive government intervention, most of us will be out starving in the streets given another year or so.”…..‘The situation is so grave it probably won’t make a bit of difference if we bail GM out or not at this point. It’s probably worth the risk to bail them out, though. If it ultimately doesn’t make any difference the cost of having done so will be quickly dwarfed by the spending required to claw us out of Depression II.”
#64 umstudent wrote:
“My point is obvious, but I’ll belabor it. Detroit has always shown itself contemptuous of smart, responsible business practices…..Detroit has always put short-term profits before long-term growth. As a result, they’ve gotten neither……If you are to give them this lifeline — paid for by my taxes and an even greater burden placed on future generations — I ask that you do so not just with strings attached, but with 12-inch thick hawsers. Detroit must commit to a meaningful goal within 5 years. Hydrogen vehicles. A 50 mpg CAFE. The technology is there. They just need to apply it to fuel efficiency instead of high-accelerating, boat-towing hogs.”
#66 Mitch wrote:
“The problem people seem to fail to see is the SCOPE..the auto industry still directly and indirectly affect 1 in 7 US jobs. That is employment, and the figure for retirees is not counted there.”
#146 texas wrote:
“Until we get fully electric and non-fossil fuel burning vehicles in the showrooms it’s downright irresponsible to be putting more petrol burning cars on the roads. We need to start a hard transition now. Unfortunately, we don’t have anything for the substitution. Thus, people are wisely staying with their old vehicles. Things are not looking good at all.”
#156 Jeffhre wrote:
“Loss of GM could mean employees, suppliers, dealers etc, of up to a million jobs lost and then the ripple effects of all those additional jobs that depended on the incomes of all of those people. Hitting all at once in a still sinking economy would have the effect of an economic tidal wave.”
GM is in Race to Survive….
This has got to be the greatest understatement of the last 100 years.
We are quickly headed towards the most challenging times since the Great Depression. I believe whatever the depth, it will likely last many years. How should the US Federal Government address the situation? Personally, I am normally against any government intervention and would want the markets to “sort things out” but this is now a VERY GRAVE situation.
We have just gone through a large speculative spike of fuel prices. As Volt supporters, we tend to believe that buying another ICE powered vehicle is like betting on a dying horse. More and more people are thinking this way.
So, what should be done now?
I believe the Federal Government must not allow the US auto industry to deteriorate further. Like others have said, there must be strong conditions attached to any support provided. I would like to see a Federal Government led “Big 3 Technical Conference” where they are REQUIRED to sign on to a kind of TECHNICAL REBOOT TIMELINE.
Bitter medicine is now needed. Aggressive schedules must be set for a conversion of all passenger car vehicles to an E-REV platform.
All passenger car vehicle designs in the pipeline must transition to E-REV within 48 months. Light Trucks might be permitted another 24 months.
In the meantime, the government should Loan / Bailout / Assist as needed to keep the auto industry employment levels at a negotiated level.
“texas” nailed it when he said “We need to start a hard transition now.”
AMEN.
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November 8th, 2008 at 12:23 pm
#108 John
Dave K.> GM, start taking Volt deposits now
Well that is the thing, with the current state of GM I would no longer be willing to give a deposit for the Volt although 6 months ago I have been willing to put down a couple thousand.
———————————-
This is a excellent point. I’ve been concerned about this for awhile myself. Previously, knowing I am going to receive the car I put money down on, I am/was willing to put down around 10K to prove I’m solid…however, if GM said I could order one today….I’m thinking $250.
This problem extends alot farther than just the Volt. It extends to any new car purchase…will GM be there to back up the warranty?
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November 8th, 2008 at 12:37 pm
Side note: I’m kind of bummed I missed a whole days worth of action on this thread…alot of things I would have liked to have some discussions about (looking mostly at you Dave, hehe). But it was a decent day overall.
As many of you know I am ‘ultra negative/paranoid’ on the market economy…and I liquified to cash/gov’t securities/munis early in the year…and then sold my house/downsized to protect that capital over the summer (it was still slightly up in Canada at the time…I figured that was the time–worked out ok, the market has collapsed a bit since September).
So I’ve packed everybody up, and we moved. I thought I got the new house at a really good price…so I decided to not only live there, but relist it as soon as I moved in (at a amount decently over what I paid), just in case some person is out there is interested. Heck, have to take the opportunity if it comes I figure.
Long story short, I had a showing at suppertime, and they guy bought it by midnite…for asking price, provided I get out in a week. I’m happy, wife is…not.
/starting over…again.
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November 8th, 2008 at 1:18 pm
What a picture. I have never seen so many incompetent people in one room at the same time. GM is broke and should be put down to save taxpayers money. Plenty of smaller and smarter auto companies will be created to take its place. Congress needs to quit giving handouts to these big poorly run companies. STOP THIS MADNESS !
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November 8th, 2008 at 1:22 pm
#44 Rashiid Amul
“I don’t know if bailing GM out is a good thing or a bad thing.
But if they do get bailed out, the people at the top should get a MASSIVE pay cut.”
I’ll see your people at the top, and raise you anyone making over $50k. (except for those working on the Volt project. They have undeniably done a fantastic job, and deserve to get paid).
Wait, what if that group became the new, reborn GM?!!
=D~~~~
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November 8th, 2008 at 1:51 pm
#167 Bill R:
Right. Chalmers Johnson, in his book “The Sorrows Of Empire”, which I have cited here numerous times, says almost exactly the same things. He says that we have allowed our manufactruing economy to be “hollowed out” by these unequal trade practices as a quid pro quo for being allowed to maintain massive military bases in Japan, Korea, and elsewhere.
Did anyone see Kevin Phillips on Bill Moyers’ Journal last night? KP, whose books I have also cited here many times, was as prescient about the current economic collapse as Prof. Johnson was about 9/11. Scary stuff.
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November 8th, 2008 at 2:19 pm
Everyone should read #58 by statik regarding the CAR report… the base post (by Lyle) is extremely misleading by implying that bankruptcy means “collapse” and that it would mean the end of GM and all the industry related industries and associated jobs that come with them.
A lot of companies have gone into bankruptcy to emerge from it in the long run in much better shape.
Even a total “collapse” wouldn’t mean the end of the jobs, with a large source of skilled auto workers other automakers may very likely come in and buy those plants and hire those workers. But even before a total collapse, if it came to that, a buyer could likely step in as well.
I still say GM should fire their CEO, it’s crazy to keep at the helm the same captain that drove you into these waters in the first place.
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November 8th, 2008 at 2:37 pm
By 2002, there was no word of any domestic competition and gas was less than $1 per gallon. Bush/Cheney quietly pulled the plug on PNGV in favor of a hydrogen initiative without deliverables for 15 years. It was a move that simply made no sense even back then, and now it is turning out to be a horrible decision with dire consequences. They killed the development funding, but none of those automakers cared. They embraced guzzling trucks instead.
——————————————————————————-
There is no way you can get a college degree without studying English. But must college graduates do not even have college freshman level proficiency in science. Anybody who took freshman chemistry at a real college, actually learned the stuff, and read enough about science over the years to maintain proficiency, knew as soon as they heard about the H2 initiative, that it would be a political success (and it was, billions handed out to favored recipients) but an automotive failure.
Hydrogen is not an energy source, because it does not exist in a free state in the earth’s crust. Every watt, or HP, or erg of energy you get from H2 has to be input during the H2 production process. H2 cannot be used to power practical vehicles because it cannot be liquefied at ambient temps. And it is so explosive that millions of mini Hindenbergs would happen every year if H2 were pervasive.
So dont be fooled by the next press release touting a “breakthrough” in fuel cell membranes, or some such thing. H2 is the fuel of the future, and it always will be.
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November 8th, 2008 at 5:27 pm
Oh someone here said that Chevy Chevette was a peice of crap.
I loved mine in college had 200k on it and it ran great.
Got great millage . Oh the stories of that car.
OH and the person who said ford trucks are bad is really off base the F150 is the best truck made. They never have problems and typically go 300-400k
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November 8th, 2008 at 8:42 pm
#176 Noel Park,
Thanks for the support.
Here are 2 other references you might like;
http://www.biorationalinstitute.com/zcontent/alpha_strategy.pdf
Pugsley wrote this almost 30 years ago, and it appears to me that much of it is coming true. We have reached the era where we must begin to pay for years of deficit spending by the government, and an era where people think they can vote for prosperity rather than work for it.
This one is by some guy named Warren Buffet. He says we need to do something about the US trade deficit (maybe fewer imports). But what does this guy know, anyway.
http://www.berkshirehathaway.com/letters/growing.pdf
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November 8th, 2008 at 10:20 pm
Jeff M 177 wrote -
“Even a total “collapse” wouldn’t mean the end of the jobs, with a large source of skilled auto workers other automakers may very likely come in and buy those plants and hire those workers. But even before a total collapse, if it came to that, a buyer could likely step in as well.”
The problem is there are no domestic auto companies in a position to drive enough market share to successfully pick up employees or substantial assets from a failed GM. The companies that would ultimately pick up the slack would export US capital and influence overseas along with jobs, parts supply business etc.
Not a good trade for the benefits of a million workers, suppliers, dealers, fully pensioned retirees and businesses and contractors, plus service and retail businesses that depend on all of the above. I’m not saying just shovel money at failing businesses, but look at how, as many of the problems created as possible, can be solved in as smart and efficient ways as possible, considering the circumstances. Hey, maybe some people think the economy is just screwed and we should all get our reservations in 1930’s style soup lines early while we still can, but before we start to experiment with irreversible options, we should look at a wider range of options.
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November 9th, 2008 at 12:45 am
#181, enough corporate welfare, it’s a given that bankruptcy of a take over by another auto maker would mean even more lay offs, but that’s what the companies need. You can’t expect reform with out some pain. GM and the other domestic auto makers screwed up, went for short term profits while gas was cheap and they spent plenty on marketing (and lobbying to keep CAFE off their asses) convincing the American public that bigger was better.
Those union wages and benefits are also crazy, only 2nd to the wages/benefits congress gives themselves. I used to work in a union shop during college summer breaks, and there was no incentive for line level workers to work harder… in fact if you did work harder the rest of the workers would be pissed at you, making them look bad. I don’t say that we should just bust up the unions as they do need some level or protection from exploitation like happened before unions arose, but they’ve gotten too powerful that the companies can no longer compete in a global economy. As someone mentioned before, bankruptcy may be the only way to renegotiate those union contracts, and if they were smart, some way to reward the harder workers instead of having them all tow the line.
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November 9th, 2008 at 10:50 pm
The Volt is not worth this much crap being flung around. I love GM. My mother has always driven chev’s. But if they must go down, just die GM. I don’t want my taxes being used like this…!
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November 10th, 2008 at 11:18 am
#74 N Riley:
A Japanese or European car dies immediately if it doesn’t get its scheduled maintenance. It also voids the warranty. An American car waits to die until just after its warranty runs out.
It’s like the gas gauge. When the gauge on my ‘83 Rabbit GTI said the 10 gallon tank was empty, it was *empty*. Not so on American cars. People get bad habits.
My last three cars have been American, though the Ford Fusion was assembled in Mexico.
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November 10th, 2008 at 12:02 pm
At least part of the problem was caused by the US government. I particularly blame the CAFE standards.
1) The cost to build a car, large or small is about the same. The materials cost difference is rather small. The overhead, labor, payroll taxes, benefits, and retirement costs are the same for each car.
2) You can charge more for a big car than a small one. The margin on a small car is slim to nonexistent.
3) The CAFE standard applies to the fleet mileage. Nobody wants a big car with a small engine. Detroit learned that in the ’70s, when they put 4 cylinder engines in full size cars. Even with the downsized platforms the performance is miserable. The full size cars *must* have the larger engines. Nobody wanted the small cars. The US companies practically had to give them away. Even so, the CAFE standard requires the car companies to push on a rope.
4) The foreign companies have lower overhead, so they could make a profit on the smaller cars, and could afford to improve them.
5) The CAFE standards and gas guzzler taxes don’t apply to light and full size trucks. This was supposed to protect small business. All companies can sell as many of *those* as they want. This makes an SUV a better value. Thus the SUV boom was born. Even the Japanese got into the act.
6) American trucks and SUVs are better than their import counterparts. They are more durable and get better mileage. The US makers reinvested their profits in that market to continually improve their products. The lower overhead of the imports was eroding their advantage.
7) The high gasoline prices killed *everyone’s* SUV and truck sales. I bet Toyota, Nissan, and Honda management regret trying to get into that market. I doubt they even began to recoup their investment in it.
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November 10th, 2008 at 12:09 pm
#180 BillR:
Just how does Warren Buffett suggest we improve our balance of payments? Does he suggest we withdraw from our trade agreements and impose tarriffs? Can you say Smoot-Hawley?
The only other thing I can think that might help is higher oil prices. That would reduce demand, and therefore our imports. It would also increase the cost of shipping imports to us. Perhaps something bad should happen to Saudi and Iranian oil fields?
That would turn out to have undesireable side effects.
Does he expect American companies to push on a rope?
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