GM CEO Rick Wagoner who is now working for $1 per year told Bloomberg “I do it because it’s important and I feel like I have a responsibility to do it. I plan to stay here until we get things well in shape and on track and beyond that, we’ll see.”
He noted that the shedding of debt, brands, capacity, and jobs that the restructuring process is causing “is really, in substance, about re-inventing General Motors.”
Wagoner was pleased about the $5B in aid auto suppliers have now been granted, he said “It’s a good sign on the proactive nature of the task force,” and “I think it’s a good sign on how they are digging in and focusing on what are the key issues.”
He expects a new lean mean (and electric) GM will result from the government-brokered restructuring. “GM will be leaner and more flexible,” said Wagoner. “We’re going to have moved significantly to lean out our cost structure and address things that have been competitive disadvantages for years.”
The President’s Task Force on Autos have been working aggressively on developing a restructuring framework, and although bankruptcy hasn’t officially been ruled out, all signs are seem to be pointing against it. Steve Rattner, the Task Forces chief, has indicated that the $16.6 billion loan GM is currently asking for “depends on them achieving plans that are somewhat ambitious.” He noted that the actual amount they will need could be “considerably more.”
“Like all management teams they tend to take a reasonably, slightly perhaps, optimistic, view of their business. So it could be more (money), I can’t rule that out,” Rattner said.
Though a technical deadline of March 31st exists to determine if a viable restructuring plan can be arrived at, possibilities still include an announcement next week or even a delay in the deadline. Difficulties remain in getting bondholders and the UAW to accept stock in exchange for debt.
Sources familiar with the negotiations told GM-Volt.com they “expect the task force to say something next week” and that “there’s been positive signals that they want to solve this outside of bankruptcy” and “help get the Volt on the road.”
Source (Bloomberg)
This entry was posted on Friday, March 20th, 2009 at 9:12 pm and is filed under Financial, Politics. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.
Mar 20th, 2009 (9:20 pm)Rattner may be saying very kindly that the GM management are naive, that is no suprise to us.
Could we arrange the sale of the Volt technology to Ford immediately?
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Mar 20th, 2009 (9:29 pm)… shedding of debt, brands, capacity, and jobs that the restructuring process is causing “is really, in substance, about re-inventing General Motors.”
Lets hope they have as good a plan for that as they have for re-inventing the automobile.
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Mar 20th, 2009 (9:31 pm)Good luck getting more bailout money with the current mood of the country. I’d say the chances are slim to none of congress approving $16B more. And slim just left town.
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Mar 20th, 2009 (9:34 pm)I heard the last part of a new country song in the car this afternoon, something about “they’re living the high life in New York Town, … but they’re shuttin’ Detroit down.”
This situation is getting ingrained into the cultural memory.
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Mar 20th, 2009 (9:38 pm)$1 a year salary, but how many 10s of millions in “non salary compensation” The $1 salary trick is a gimmick and a joke that my 4 year old can see through.
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Mar 20th, 2009 (9:39 pm)Detroit will come back with a vengeance. You’ll see. GM is not fooling around anymore.
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Mar 20th, 2009 (9:43 pm)Coincidentally, I posted this in the forum this afternoon.
http://news.moneycentral.msn.com/ticker/article.aspx?Feed=OBR&Date=20090320&ID=9716700&Symbol=GM
“”We would be willing to work around the clock — lock us in a room with all the parties if you need to — so we can work toward a solution that’s best for GM, the taxpayers and the company’s workers,” the statement said.”
Yes, please take them up on this offer. This is what I have been advocating. Make it a mutli-day summit if need be but make it their choice to reach a deal or endure bankruptcy once the time limit is reached.
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Mar 20th, 2009 (9:43 pm)Hopefully they sell a lot of camaro’s and maybe then have a case to bring back the firebird. Whatever it takes to help sales
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Mar 20th, 2009 (9:50 pm)” … bring back the firebird …”
Some people (guess where) seem to think that a hybrid can be sporty too (just ask MR2):
http://www.allcarselectric.com/blog/1019551_toyota-mr2-to-return-as-a-hybrid-coupe
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Mar 20th, 2009 (9:51 pm)Wagoner seems to be saying that he doesn’t want to waste the crisis. That’s not a bad approach. Bankruptcy seems unlikely for many reasons, one of which is that it would cost some multiple of federal funds to finance a bankruptcy than it would to fund a restructuring outside of bankruptcy. As for the players, GM doesn’t want it, the UAW doesn’t want it, and the bondholders know they’d end up with less if it happened so they’re not enamored of it. So we have the standard negotiating process. But if the UAW and the bondholders are PITAs we may see it.
On a related note, the big news this week (apart from the sideshow of the AIG bonuses) is that the Obama Administration has unveiled its legislative strategy for this year. They are going to try and get a bi-partisan health care deal with the Republicans. If that fails they are going to pass the legislation as part of the budget process (which, if you remember back to how the Bush tax cuts were enacted without bare majority support, is not subject to filibuster in the Senate).
This means two things. One is that health care will be enacted in some form, presumably making it easier for the UAW to make concessions on that issue. Two is that cap and trade is not going to happen this year. Koz, forget your gas tax!
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Mar 20th, 2009 (9:55 pm)“Congress is supposed to be protecting the purse”:
Ron Paul on “America Morning”
http://www.campaignforliberty.com/
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Mar 20th, 2009 (9:57 pm)Yes, the $1 is a gimmick but look how American reacted to .1 percent of their money being paid out in retention “bonuses”. If they called it, Close-down project payments they would have been able to pay them with no problem.
The sorry state of our country is that we are highly uneducated when it comes to business, science, math and other useful things. Decision makers have to play the games and try to get people to understand very complex systems. Buzz words, pounding of the podium, calls for lynching, etc. All part of the political game.
Politicians will continue to use these tactics until the public wises up. Studying simple micro and macro economics and finance would be more than enough for people to be more understanding and to act more responsibly with their finances.
It’s really funny because the public is screaming at the government when it’s the public that got themselves into the mess! Did the government purchase houses that they couldn’t afford? Did the government charge up $10,000 in personal credit card debt and take second and third mortgages on their homes? Well, they probably did! lol. However, so did too many Americans.
If we live more within our means we would be more stable. However, that’s not the American way! Just go full out and if we fall, we will bitch, pick ourselves up and start running. It our charming nature.
Remember, if you are bitching at the government you are bitching at yourselves. We elected them and most likely we are the ones who got ourselves into the trouble in the first place.
If we were smart and only purchased green homes that were within range of our work places and used only green transportation like walking, bikes, rapid transit and ate food that was locally grown then we would have a much more stable and sustainable existence.
Getting fat on sweets from France, driving Hummers and buying 10,000 square foot homes that are over an hour’s drive from work are the kinds of things too many of us do. We are in deep trouble and it’s time to pay the piper. Bitch all you like! It is not going to change the fact that we have to learn to live more sustainably, even if that means abandoning our current lifestyles. I say good riddens!
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Mar 20th, 2009 (9:59 pm)$1 a year to Rick Wagoner? That’s $1 more than I am currently making (and about 1 in 10 Americans at this point), but still, my opinion of the man just sky rocketed. Hearing his conviction to turn GM around almost brought a tear to my eye. I hope he can do it. I hope to some day be a proud owner of a GM manufactured car (key word being “proud”).
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Mar 20th, 2009 (10:04 pm)DonC #9
“Koz, forget your gas tax!”
Huh? I am in favor of a stepped in gas tax over time, something like $0.05/quarter up to $1 or so, but haven’t said anything about gas taxes in a while.
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Mar 20th, 2009 (10:12 pm)Gas-tax hike looks good to GM chief
http://www.washingtontimes.com/news/2009/mar/18/gm-chief-says-gas-tax-hike-worth-considering/
In a surprising turnabout, General Motors Corp. Chief Executive Officer Rick Wagoner said Tuesday that increasing the federal gasoline tax to guarantee a minimum price of $4 a gallon is an idea “worthy of consideration.”
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Mar 20th, 2009 (10:16 pm)Why would Ford buy the Volt architecture? They already have an electric car in the works. Not like there’s other architectures out there that aren’t better than the Volt. AC Propulsion’s system is way better than the Volt but because GM only sells products that they develop, they suffered from slow development. Had they gone with AC Propulsion’s system until they develep something else, ,they wouldn’t have spent so damn much and could have been on the forefront technology. Numskulls!
As far as I’m concerned the Volt is limited. Too short of a range, and too large of a motor. Not enough PV cells, and they should have started with a truck or mini van. They are much easier to develop. IMHO
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Mar 20th, 2009 (10:25 pm)#14 koz — Sorry man. I confused you with k-dawg. Wasn’t disparaging the idea BTW, just that it wasn’t going to happen this year. Glad you support it rather than being dead set against it. That would have made my mistake worse.
Speaking of k-dawg, I think he mentioned a cash for clunkers program. There is a bill in the house which would give you $7500 for a clunker if you traded it in on an EV or PHEV that got 100 mpg during the calendar years 2011 – 2013. The Volt is getting cheaper all the time.
I can see people scouring the streets for really inexpensive beaters that they can buy cheap and trade in on a Volt or plug-in Prius.
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Mar 20th, 2009 (10:34 pm)#16 Richard Says: As far as I’m concerned the Volt is limited. Too short of a range, and too large of a motor. Not enough PV cells, and they should have started with a truck or mini van. They are much easier to develop.
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The Volt’s range is right on target, classic 80/20 marketing, and GM is sticking with it for future versions:
Future Volt Generations Will Offer Cheaper, Smaller Batteries, Not Longer Ranges
http://gm-volt.com/2008/12/24/future-volt-generations-will-offer-cheaper-smaller-batteries-not-longer-ranges/
Larger electric motors are more efficient than smaller motors at the same RPM and power output. This is the exact opposite of gas engines, so its a little hard to get used to at first.
Putting PV solar cells on a car is stupid. There’s not enough area on a car to produce significant power to charge the battery. All solar car roof systems announced just spin a small fan when its hot out. Since silicon solar cells require huge amounts of energy to create, and since car PV cells don’t charge the battery, it ends up just being a huge waste. You might as well put on a bumper sticker that says “I love to waste energy”, and save yourself $4000 for the solar PV roof option.
An EREV truck or minivan would require super-large batteries, which would make them super-expensive. Have you noticed how Chrysler hasn’t talked about prices for their EREV Jeep or Minivan? They haven’t talked about a production date either.
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Mar 20th, 2009 (10:36 pm)Anyone who trusts the Govt to run their health care is an idiot.
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Mar 20th, 2009 (10:38 pm)DonC,
No harm no foul, especially if you support my lock ‘em in a room resolution. Hmmm…maybe I could be politician.
Just saw you added the cash for clunkers comment. This sounds interesting but I think a non-commercial gas tax would be a better for numerous reasons.
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Mar 20th, 2009 (10:42 pm)Here is a problem I see in the future. G.M. and the other big 2 are permanently shedding capacity, not just idling facilities. President Obama stated yesterday on Jay Leno that the American auto market can sustain about 14 million a year in vehicle sales. U.S. auto sales were running hot at 17 million for a few years which means the U.S. car fleet is relatively young and people can afford to hold on to cars for a while. Sooner or later, car sales are going to sky-rocket and the U.S. auto makers will have shed so much capacity there will be a car shortage and the Japanese (and Chinese?) automakers will be in a position to grab an even bigger chunk of the U.S. market.
I bring this up because I place a lot of the blame for the comatose economy squarely on our 2 political parties and their short sighted oversight of the financial markets, short sighted trade policy that has exported 80% or more of all manufacturing jobs and associated technology, and short sighted federal fiscal policies that trade debt for votes.
As far as I’m concerned, the federal government owes the American auto industry some help, far more than it owes Wall Street help. It is their policies that created the bubble economy that make it almost impossible for even the best managed U.S. manufacturers ( or retailers for that matter), to do any reasonable long term capacity planning.
In 5 years we could very well be paying +P retail for even the most mundane vehicles because the car makers won’t have the plants to keep up with demand, creating yet another car bubble.
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Mar 20th, 2009 (10:45 pm)#17 DonC
Or rather, like in California where the state will buy older cars for $300 (air quality program), $300 becomes the minimum price for a used car, running or not. There are also charities which advertise that they take in-kind donations in the form of cars (running or not).
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Mar 20th, 2009 (11:04 pm)Over the last five years or so, Wags brilliant leadership has bankrupted GM, and now we are told to keep him. Wags builds cars that lose 20% with every sale. It is the legacy costs that have not been addressed, while more billions are burned every month. Enough.
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Mar 20th, 2009 (11:07 pm)Why in the world would they keep the very management that ran GM into the ground. I’m sure Ricks talent could be used in better places…
Hows “parking lot stripe painter guy”…oh yeah…all the lines would tend to slope way downward like the sales charts….or have un even gaps like the body panels of GM cars….
Working for a dollar is great if you have something to contribute.
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Mar 20th, 2009 (11:50 pm)25.
Guy Incognito Says:
March 20th, 2009 at 11:50 pm
Mo money
Mo money
Mo money
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Mar 21st, 2009 (12:08 am)#12 Texas says “The sorry state of our country is that we are highly uneducated when it comes to business, science, math and other useful things.”
Also we have no judgement, as this off topic — but humorous and related to cars and money — personal experience attests to.
Yesterday when coming home three or four cop cars went by me. The lights were flashing but no sirens. A few miles later I saw some dollar bills floating around. Weird. Then I see people stopping their cars on the side of the freeway to run out and grab them! I was really irritated that these folks were helping themselves to something that clearly wasn’t theirs but I kept on trucking.
A couple of miles later I see the bills floating around again. This time people were just stopping their cars on the freeway and running around the freeway. I was going maybe 50 mph (down from the usual 70) when I see two guys running down the road right at me. I just about crapped. They looked absolutely terrified and jumped out of the way. They may have crapped. At that point I was furious that so many idiots would risk their lives to chase down a few bucks. It was insane.
It turned out the police were chasing a bank robber who, for whatever reason — these guys never have very clear thought processes — decided to toss the money out his car window. The news said they recovered most of it but I’m doubtful. Anyway, the whole episode was unreal.
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Mar 21st, 2009 (12:14 am)Texas Says:
It’s really funny because the public is screaming at the government when it’s the public that got themselves into the mess! Did the government purchase houses that they couldn’t afford?
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I disagree, and here’s why.
You can’t change the core nature of any species. For example, if you light a tree on fire, it is going to burn. And if you offer free money to people, they’re going to take it. Both results are completely predictable and understandable.
In our case, the government started the fire by requiring banks to offer free loans to people who couldn’t afford to pay them back. People took the money, creating bad assets for the banks. Then the government poured gasoline on the fire by helping hide the risk and make the bad assets appear good. Then these toxic assets circulated through our entire financial system, even being used as assets against new debt (in a macro-economic money-multipler kind of way). This created a flash fire that lasted for a while, then suddenly burned out.
I don’t blame people for wanting money, just like I don’t blame trees for wanting to burn. I blame that which started the fire … the government.
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Mar 21st, 2009 (12:15 am)#20 koz
Something is needed. Last summer when gas prices were high you could go to the grocery store and all the vehicles in the parking lot were cars. Now the SUVs are baaaaaaccccccckkkkkk. People have short memories. I just hope gas prices stay low long enough so I can get a Volt before the crush!
#22 Lurtz
Didn’t know that about the $300 but it makes sense. You’d think a car would be worth more in parts. Then again the tax dodge of donating your $500 car for $5000 has been more or less shut down so the CARB $300 plan may be more appealing.
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Mar 21st, 2009 (12:27 am)Why you guys are thinking its your tax money ? GM is asking only a small part of money it payed as taxes to govt for last 100 years.
and i support Rick because after Rick came as caption, there is a big change in GM ,quality of cars, new research etc. if it was somebody else, GM would have been already a history.
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Mar 21st, 2009 (12:43 am)#27 Paul-R
Nice piece of fiction. Where does this goofy stuff come from? What you’re talking about is the Community Reinvestment Act. It was started in 1977 to combat redlining, a practice which was accused of being racist. In 1999 it was weakened.
All that backs the claim that CRA had anything to do with bad loans are the unsubstantiated claims of a couple of economist who know that every economic ill is caused by government rather than the private sector — and all we need do is find the evidence.
Yet after much looking, and despite countless efforts of torturing the data to extract a confession, no evidence has ever been produced to support their claim. The Govenor of the San Francisco Federal Reserve has rejected it, as has FDIC Chairman Sheila Bair, Comptroller of the Currency John C. Dugan, Daniel Gross of Slate, and Aaron Pressman from BusinessWeek. IOW basically every credible person who has looked at the claim.
The conclusion is pretty self-evident. The CRA was passed in 1977. Why didn’t all these bad loans surface then? Why did they only start showing up 30 years later when the first loans would have been held to maturity? Second, most of the so called “toxic loans” were made by financial institutions not subject to the CRA. If the CRA is the source of the bad loans, whey did 75% of the bad loans come from institutions not subject to the CRA? It should have been the opposite.
Finally, in case you missed it, the big problem has been with credit derivative swaps, and poor people from Watts were not engaged in buying or writing those financial instruments.
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Mar 21st, 2009 (2:08 am)GM has produced low quality sedans for the last 20-30 years. I don’t care what anyone says, a 10-15 year old Toyota or Honda sedan is hands down worth paying twice as much as a 10-15 year old GM or Ford sedan, read vehicle owner reviews on Kelly Blue Book or Consumer Reports. Compare any 10 year old Chevy Cavalier with a 10 year old Toyota Corolla, compare any 10 year old Ford Taurus with a 10 year Honda Accord. A 10 year old Malibu with a 10 year old Toyota Camry. Even if you don’t want to, people are, and they are looking at resale value, and a lot of people are switching to Japanese auto makers.
Pickups and SUVs are probably closer to being on par, but you can’t base your long term viability on one market segment that you are almost as good as your competitors in and hope to be profitable year in and year out.
GM has been steadily going downhill for a while, but you gotta give props to him for the new contract negotiated with the UAW that will take affect soon. He has also worked through a very sticky situation with the EV1. By his own admittance, hindsight apparently has made it known that he made a mistake in canceling the project in 2003.
Also, you’ve gotta realize that you can’t blame all of the problems GM is facing on one guy. There are many unrepentantly sloppy UAW workers, unhelpful dealership policies, and other short sighted executives that have looked at the short term bottom line more than building relationships of trust.
There is a serious shortage of visionary CEOs in our country, in my opinion, Wags is about as good as we are going to get (unless someone thinks they could pick up Steve Jobs).
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Mar 21st, 2009 (4:55 am)I am waiting for Statik’s linguistic excercise. It seem to me high time for that.
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Mar 21st, 2009 (5:44 am)#31 omnimoeish,
Lot’s of good points here.
Wagoner may have to go. I’m not saying he’s a bad CEO, but when companies are restructured, they generally get a new guy at the top. Keeping the same guy could give some people the impression that nothing has changed, even if it has.
Again, I have nothing against Wagoner per se, but from a public image point of view, it may be better to start clean with someone from the outside.
Or maybe not. We’ll see.
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Mar 21st, 2009 (6:52 am)cmon those chinese have a billion people and tell them sell to sell to them itself and the japanese can use their trade surplus to give people free cars. tell them not to come here. those chinese bastards should never be left here
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Mar 21st, 2009 (7:31 am)______________________________________________________
#3 Steven Said:
Good luck getting more bailout money with the current mood of the country. I’d say the chances are slim to none of congress approving $16B more. And slim just left town.
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Steven, you are grossly underestimating our politician’s willingness to spend your money.
The Magical Jelly Bean Jar:
Our politicians are not in touch with the “mood of the country”. To them a $1B unit of taxpayer’s dollars is nothing but a Jelly Bean. Our politicians make a career of handing out Jelly Beans in trade of further advancing their power base under the banner of “special earmarks”, “stimulus”, and “bailouts/loans”. These politicians believe that the Jelly Bean jar is somehow magical; that it has no bottom. Most politicians don’t even associate all those Jelly Beans that they are giving away as ultimately belonging to the American People. They believe that those Jelly Beans have been provided to the government (vis-à-vis American bonds issued to the Chinese) and that the transaction does not involve the little people (us American taxpayers).
I am a huge VOLTEC Head. But I have to say that I’ve been very disappointed by the eagerness of GM to put its hand out to the government and the government’s willingness to give GM unlimited access to our taxpayer earned dollars. Honestly, if Ford came out with a VOLTEC type offering, I’d be all over that because I respect that Ford has managed to stay out of my pocket.
I feel better now, Vent Over.
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Mar 21st, 2009 (7:32 am)“In a surprising turnabout, General Motors Corp. Chief Executive Officer Rick Wagoner said Tuesday that increasing the federal gasoline tax to guarantee a minimum price of $4 a gallon is an idea “worthy of consideration.””
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So, if a tax is implemented that adjusted to maintain $4/gallon gas, guess what the oil companies will sell gas for?
You got it, $4/gal!
If you want to wean yourself from oil, and not make the oil cartel rich, your best answer lies in competition, not taxation.
Alternative fuels will become viable, when they make true economic sense. Forcing these options, by artificially inflating a commodity such as oil, can lead to expenditures and waste. Spending tax dollars to build expensive (billions-to-trillions) new ethanol, wind farms, solar farms before they are economically self sustaining is ludicrous (and I am talking Space Balls, Ludicrous!)!
I am a believer in development of alternative fuels and energy sources, but they need to make true economic sense, otherwise they are just future moth ball projects.
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Mar 21st, 2009 (7:47 am)ziggy Says: @6
“Detroit will come back with a vengeance. You’ll see. GM is not fooling around anymore.”
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If given this last chance, GM will! I’m a retired GM employee and through the years with GM, I have seen what they are capable of. True, they slept for many years but they are now fully awake and deserve a chance….they did not cause this recession. The fools in DC and AIG did. And now AIG is getting tax dollars like there’s no tomorrow.
Only with this one reason below is why GM Ford and Chrysler should not go out or business.
WORTH SENDING AROUND, SINCE WE ARE IN TROUBLE NOW …..
GM, Ford, & Chrysler
INTERESTING…maybe the country should consider bailing them out to some degree
Nothing needs to be said… Ford, Chrysler and GM’s contributions after 9/11
An interesting commentary…You might find this of interest:
CNN Headline News did a short news listing regarding Ford and GM’s
contributions to the relief and recovery efforts in
New York and Washington.
The findings are as follows…….
1. Ford – $10 million to American Red Cross matching employee contributions
of the same number plus 10 Excursions to NY Fire Dept. The company also
offered ER response team services and office space to displaced government employees.
2. GM – $10 million to American Red Cross matching employee contributions
of the same number and a fleet of Vans, SUV’s, and Trucks.
3. Daimler Chrysler – $10 million to support of the children and victims
of the Sept. 11 attack.
4. Harley Davidson motorcycles – $1 million and 30 new
motorcycles to the New York Police Dept.
5. Volkswagen – Employees and management created a Sept 11 Foundation,
funded initial with $2 million, for the assistance of the children and victims of the WTC..
6. Hyundai – $300,000 to the American Red Cross.
7. Audi – see VW
8. BMW – Nothing.
9. Daewoo – Nothing.
10. Fiat – Nothing.
11. Honda – Nothing despite boasting of second best sales month ever in August 2001
12. Isuzu – Nothing.
13.. Mitsubishi – Nothing.
14. Nissan – Nothing.
15. Porsche – Nothing. Press release with condolences via the Porsche website.
16. Subaru – Nothing.
17. Suzuki – Nothing.
18… Toyota – Nothing despite claims of high sales in July and August 2001.
Condolences posted on the website .
Whenever the time may be for you to purchase a new vehicle, keep this information in mind. You might want to give more consideration to a car manufactured by an American-owned and / or American based company. Apart from Hyundai and Volkswagen, the foreign car companies contributed nothing at all to the citizens of the United States …. It’s OK for these companies to take money out of this country, but it is apparently not acceptable to return some in a time of crisis. I believe we should not forget things like this. Say thank you in a way that gets their attention..
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Mar 21st, 2009 (7:52 am)#5 CDAVIS
I am on course with most of what your saying.
I share a lot of your pessimism on how our govt operates, but I would not apply such a broad stroke to all those in the govt sector.
I do believe that a good percentage of those sitting in Congress and the Senate, have their constituents in mind and are truly attempting to solve our economic crisis. The problem is that we need to demonstrate patience, which we all seem to lack. This lack of patience forces us to make hasty decisions.
For example, this AIG mess. I am unbelieving, that the govt can come up with a plan, basically overnight, to implement a “targeted tax” to recoup the bonus money given out to AIG executives. I can almost guarantee, that this “targeted tax” will have unforseen consequences to other business’. Mark my words, and when we hear the news about how company XYZ had to pay some huge unintended tax, you can come back and read my post (I am like bloody Nostradamus!)
We did not get into this mess overnight, and we are not going to just find the silver bullet and all will be well.
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Mar 21st, 2009 (7:53 am)JEC Says: @36
“So, if a tax is implemented that adjusted to maintain $4/gallon gas, guess what the oil companies will sell gas for?
You got it, $4/gal!”
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You miss the point. The point is if gas is too cheap, consumers will not buy electric cars. If the gas is already at four dollars a gal., then there is no need to tax gasoline.
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Mar 21st, 2009 (7:57 am)#30 Joe
Interesting post.
I will definitely keep this in mind.
My question would be, did GM, Ford, Chrysler provide charity to other countries? I would not be surprised if the answer is yes, but I think this would be the true measure of what your getting at.
Thanks for the info.
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Mar 21st, 2009 (7:58 am)#9 Joe
You miss my point. My coffee is low, but please re-read my post.
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Mar 21st, 2009 (8:08 am)To JEC @41 from Joe
Your right, I did missed your point. Thanks for opening my eyes.
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Mar 21st, 2009 (8:08 am)I’d like to know how much equity the US government will own of GM by the time this is said and done. Nothing says socialism like owning the means of production. If GM isn’t the means of production, I’m not sure what is. This is not about the Volt anymore.
On another note, I think it highly likely I’ll be buying a Ford Focus EV for my part against OPEC. GM is playing with fire.
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Mar 21st, 2009 (8:25 am)#36 JEC Says: If you want to wean yourself from oil, and not make the oil cartel rich, your best answer lies in competition, not taxation.
Alternative fuels will become viable, when they make true economic sense. Forcing these options, by artificially inflating a commodity such as oil, can lead to expenditures and waste.
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First, the U.S. government is essentially subsidizing the price of gas now, so some type of additional taxes are long overdue.
Second, alternative fuel technology is already viable, they just need investment to scale up volumes and reduce costs. As I’ve said many times before, it’s not research scientists that make a product cost competitive, it’s manufacturing engineers. But manufacturing engineers only get fully engaged when product volumes start to ramp up, because that’s what pays their salary. So you have a classic chicken-and-egg scenario, and you need something to force your way out.
Put in another way, would you invest a large part of your portfolio in alternative transportation? If there was some type of tax floor on gasoline or oil in general, would that affect your decision?
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Mar 21st, 2009 (8:34 am)#35 CDAVIS Says: I am a huge VOLTEC Head. But I have to say that I’ve been very disappointed by the eagerness of GM to put its hand out to the government and the government’s willingness to give GM unlimited access to our taxpayer earned dollars.
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Keep in mind that any Chapter 11 scenario involves greater amounts of government loans, so your statement above is essentially advocating a Chapter 7 liquidation of GM.
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Mar 21st, 2009 (8:42 am)Off topic, but an interesting cover artcle in my current issue of NASA Tech Briefs magazine about the Volt battery, and automotive battery development/manufacturing in the US in general, is also online at:
http://www.techbriefs.com/component/content/article/4980
Nothing can stop the electrification of the automobile now!
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Mar 21st, 2009 (8:44 am)#43 Dave B Says: I’d like to know how much equity the US government will own of GM by the time this is said and done. Nothing says socialism like owning the means of production. If GM isn’t the means of production, I’m not sure what is. This is not about the Volt anymore.
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Let’s be clear. The U.S. government does not want to be in the car business, or the banking business, or the insurance business. The idea is to get in, get the business profitable again, and then get out ASAP.
This is exactly the way the Chrysler bailout worked in 1979. Chrysler paid the government loan back in full by 1983. Let’s hope this one goes as well…
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Mar 21st, 2009 (8:57 am)#36 JEC Says: So, if a tax is implemented that adjusted to maintain $4/gallon gas, guess what the oil companies will sell gas for? You got it, $4/gal!
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It’s a world oil market. The only way to raise oil prices is to cut back on production, and that would have to be coordinated between OPEC, Russia, Canada, etc., which is not likely.
But even if they do all coordinate to cut oil production and raise oil prices, that would probably be a good thing, given the reality of peak oil.
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Mar 21st, 2009 (9:02 am)To Joe @37
Thanks for your informative reply.
It warms my heart to know that there are other people who know the deeper story behind our American auto industry.
I have been telling folks for years the Americans are the most generous, caring, compassionate in the world.
And we are equally generous to other countries when trouble arises.
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Mar 21st, 2009 (9:05 am)48 Dave G
I think we are going to disagree on how price, tax, demand and economics play into the development of alternative fuels.
I believe I understand your premise, but just do not follow the same line on this subject.
Appreciate your well thought out ideas, but I guess we can agree that we disagree on this matter.
Have a nice one. Gotta run to basketball tourney (youth, not NCAA).
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Mar 21st, 2009 (9:08 am)Raser Introduces Series PHEV Drive System E REV Truck Chrysler
http://www.youtube.com/watch?v=_uIOxL3M-ys
“Like a Chevy Volt on steroids.”
We will have E-REV electric cars even if we don’t give $ BILLIONS to GM.
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Mar 21st, 2009 (9:17 am)I am tired of waiting. I think this summer, I’m going to take my saved up down payment and convert my 12 year old pickup truck to electric.
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Mar 21st, 2009 (9:20 am)#51 Tim Says: Raser Introduces Series PHEV Drive System E REV Truck Chrysler
http://www.youtube.com/watch?v=_uIOxL3M-ys
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Great video. Thanks for the link!
Notice they don’t say anything about price, and say it’s only available for fleet owners. But still, this is exactly the right direction for the future, like a dream…
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Mar 21st, 2009 (9:27 am)To omnioeish @31:
Your bias shines through nicely when you bring up 10-15 year old comparisons.
Buick and Jaguar are now the highest quality nameplates on the planet, beating out ALL the Japanese brands according to J.D. Powers.
And Suzuki was dead last.
See this article and dozens more if you care to look. But as you said above, you “don’t care what anyone says,” so there might not be any hope for you.
http://www.freep.com/article/20090320/BUSINESS06/903200331/1019/BUSINESS/Buick+tops+Lexus+in+dependability+ratings
I suggest you go and splash cold water on your face, take some deep breaths, and ARRIVE into the 21st century. You will think more clearly with current facts.
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Mar 21st, 2009 (9:52 am)I am sick and tired of you cynics bad-mouthing our government, GM and everything else. We may have its problems, but we is so far superior to anything else that there is no contest. U.S. WINS! And so will Gm. GO GM,! GO VOLT!
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Mar 21st, 2009 (10:02 am)Jackson #4
… but they’re shuttin’ Detroit down.”
OPEC gouging and poor model year decision making = “they’re”
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Mar 21st, 2009 (10:17 am)#54 ROBERT
Agree with you if two things happen.
First our government must start a fair trade program rather than the current free trade system.
Second the mind set of our citizens must change so that anti american products talk is not fashionable at cocktail partys.
There have been post on this web site by people bragging that there are no U S made cars in their parking lots! Till this attitude ends the reports like J D powers ranking Buick as best over a 3 year period will mean nothing.
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Mar 21st, 2009 (10:31 am)#51 TIM
THANKS! Best thing I have seen here in a long time. JMHO
Take Care
Arch
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Mar 21st, 2009 (10:48 am)old man #57
Have a look at your local grocery store parking lot.
Maybe it’s best to word the posts, “With enough attention to low per mile cost of operation and to overall quality the American car manufactures will someday have cars filling the grocery store lots”.
Until then, it’s wishful thinking. Closing ones eyes doesn’t make the monster go away.
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Mar 21st, 2009 (11:06 am)http://news.alibaba.com/article/detail/cars/100072088-1-myth-electric-car.html
Take Care
Arch
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Mar 21st, 2009 (11:11 am)#59
Agreed!
Its a mind set, J D Powers means nothing. My 99 Buick with 186,000 miles on it and only one unscheduled service need [intake manifold gasket] means nothing.
I know this is not acceptable conversation, but hopefully the mindset will change.
I have a friend who owns a Honda perswonally and has a Chrysler van [company supplied] and while I was riding with him in the Chrysler we talked about the quality of American cars compared to Honda. He said the Honda was better quality and you tell by simply shutting the door with no pressure. So after I got out of the Chrysler I closed the passenger door with nearly no pressure applied and it closed nicely. I said “you mean the Honda door closes like this one”
He said ” well the Honda just seems more solid to me” Great answer, personal sensations can not be contested nor can they be proved.
Mind set!!!
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Mar 21st, 2009 (11:13 am)DonC Says:
Nice piece of fiction. Where does this goofy stuff come from? What you’re talking about is the Community Reinvestment Act. It was started in 1977 to combat redlining, a practice which was accused of being racist. In 1999 it was weakened.
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Unfortunately, it’s not fiction, and it’s not just the CRA. The CRA was only a mild beginning The more recent causes were deregulation under President Clinton combined with the efforts of share-the-wealth and houses-for-all congressmen who pushed for the issuance of risky loans and then conspired with Freddie Mac and Fannie Mae to swap these toxic assets and make them appear solid. Their justification of course was housing for the poor, but (predictably and understandably) most of the housing money went to people trying to get rich from the housing bubble that resulted.
If you don’t believe me, hopefully you will believe these old news clips that show the people who actually caused it:
http://www.youtube.com/watch?v=_MGT_cSi7Rs
http://www.youtube.com/watch?v=63siCHvuGFg
http://www.youtube.com/watch?v=ivmL-lXNy64
After watching those, then watch this Beck video that shows the outrageous size of the resulting housing bubble.
http://www.youtube.com/watch?v=DCx-EWwh0IA
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Mar 21st, 2009 (11:23 am)old man #61
I sometimes drive our company Chrysler Van. I like it but wouldn’t buy one. My next car will have electric drive. OPEC can go hike to h3ll.
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Mar 21st, 2009 (11:28 am)Dave K.
Agreed totally!! I WILL buy an E-REV!!!!
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Mar 21st, 2009 (11:35 am)Is this GM-Volt.com or did I tune in to Larry King Live by mistake?
#4 Jackson:
Yeah, I heard it yesterday too. So much the better!
#30 Don C:
Thank you!
#55 ROBERT M. SPERRY:
Thank you too.
“If we do not hang together, most assuredly we shall all hang separately.”
Benjamin Franklin
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Mar 21st, 2009 (11:41 am)Based on past experience, I wouldn’t believe anything Rick Wagoner says. Just last week came another instance, when he claimed that over 99% of the good effects could be achieved without going thru bankruptcy, followed not 6 days later by words that indicated that bankruptcy would be the best option. I consider Rick Wagoner incompetent. He has zero guts and no ability whatsoever to convince anyone of anything he says. At $1 per year, I’d say he’s being overpaid. GM cannot afford Rick Wagoner, at any price. Here’s a situation where it will be crystal clear just how important it is to hire some multimillion dollar CEO who can handle GM.
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Mar 21st, 2009 (11:41 am)BTW, it looks like the Task Force is actually coming up with some sort of a plan. I devoutly hope so.
If I had to choose between Citigroup, AIG, B of A, and all the rest of the 40 thieves vs. GM and Chrysler, I would choose the latter. Plus, the size of the bailouts is an order of magnitude smaller. Which is what the country singer is talking about, IMHO.
Hand $160 Billion to AIG on a plate and then quibble about $16 Billion to GM? And how many jobs at stake in either case? The man is saying, get a sense of proportion. !@#$% right, says I.
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Mar 21st, 2009 (11:47 am)#32 Darius said:
I am waiting for Statik’s linguistic excercise. It seem to me high time for that.
=========================
Lol. There really is not a lot to add to this thread…or the source Boomberg article.
The general rule of thumb is any financial news opinion piece that drops on the weekend is usually just coffee table fodder, and any decisions or opinions formed on such pieces are misplaced. I don’t generally don’t read anything printed on a saturday or sunday, or watch any ‘business’ program…the money and brains work when the markets are open.
I will say this, it sounds like another article underlining the notion that the gov’t is waning on its March 31st deadline…and that is the only thing of value to be read (imo).
As Lyle mentions, “Difficulties remain in getting bondholders and the UAW to accept stock in exchange for debt,” which is very true. However, if the deadline is perceived as weak, or there are ‘extensions’ or delays by the government to maintain the statues quo, we go from ‘difficulties’ to ‘impossibilities.’
The UAW/bondholders are already in a huge position of strength and are riding a ton of confidence from calling the last bluff in December…and from calling the GMAC bluff.
The gov’t had lots of excuses to buckle last time. Like ‘wanting to get to a new administration,’ no time to get their feet under them because of the speed of GM’s decline, congress breaking, maybe they wanted to try out for audition for this season’s ‘So You Think You Can Dance,’ etc — who cares
This time, they have nothing. We have a new government now, they have had months to take action, to do something…anything. If they come out with a weak sauce excuse that says that March 31st deadline really isn’t so important, it undermines everything, their will be no ‘cost structure’ changes from this point out. The UAW/bondholders will dig in. THE UAW will keep their wages, the bondholders will break the government’s back and get some kind of gov’t guaranteed 50 cents on the dollar deal…and GM will be saddled with all the same problems that got them to where they are now.
If March 31st is blown, there is two choices, throw taxpayer money at GM until the recession/depression is over…at which point they will be a running joke of American failure, then the public (now not cowering in the cornor in fear anymore) will clamor for the faucet to be turned off and you can overlay GM’s history with AMC. Or, choice two, they grow a backbone at some point and do a surprise berserker bankruptcy/GSB out of left field on them.
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Mar 21st, 2009 (12:02 pm)To omnioeish @31:
Your bias shines through nicely when you bring up 10-15 year old comparisons.
Buick and Jaguar are now the highest quality nameplates on the planet, beating out ALL the Japanese brands according to J.D. Powers.
And Suzuki was dead last.
See this article and dozens more if you care to look. But as you said above, you “don’t care what anyone says,” so there might not be any hope for you.
http://www.freep.com/article/20090320/BUSINESS06/903200331/1019/BUSINESS/Buick+tops+Lexus+in+dependability+ratings
I suggest you go and splash cold water on your face, take some deep breaths, and ARRIVE into the 21st century. You will think more clearly with current facts.
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to PLJ #54
First of all, those are “initial quality” surveys. Any real comparison has to be based on reality, you have to look at trends, not just compare a vehicle made last week and say its more reliable than the vehicles made last week from other auto makers. It’s pretty hard to accurately predict something like how the transmission will perform in 10 years from now, or how long xyz parts will last with 100,000+ miles on the car. If you want to talk “facts” as you put it, you have to look at facts, not guesses.
Second of all, I was comparing the GM vehicles made 10-15 years ago with those being made today to show that things have turned around quite a bit, today’s GM made cars are quite obviously light years ahead of where they were in the late 90’s before Wagoner took over. I think he gets more grief than he deserves.
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Mar 21st, 2009 (12:14 pm)Dave G @ 47:
Let’s be clear. The U.S. government does not want to be in the car business, or the banking business, or the insurance business. The idea is to get in, get the business profitable again, and then get out ASAP.
This is exactly the way the Chrysler bailout worked in 1979. Chrysler paid the government loan back in full by 1983. Let’s hope this one goes as well…
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That would be your prefernce and my preference. But that powers that be may not be of the same objectives. I sincerely hope you are correct on both counts (success and that the government is not looking to own the business).
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Mar 21st, 2009 (12:15 pm)#46 nasaman
Let’s hope the government can stoke the Alliance and that the Alliance’s technology blossoms. We need it desperately.
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Mar 21st, 2009 (12:32 pm)If GM really wants to have people notice the new technology they need to pull Tiger Woods off of Buick and have him drive the Volt. And don’t forget to have Woods flash that multimillion dollar smile as the electric torque kicks in.
C’ mon Tiger, how about a free bee Chevy Volt ad for America? It will cost you just 1/2 a days time and may save 500,000 jobs. How about it?
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Mar 21st, 2009 (12:32 pm)#69 omnimoeish says “First of all, those are “initial quality” surveys.”
Er, they’re not. Third sentence: “The results were revealed as part of J.D. Power’s LONG-TERM vehicle dependability study.” (emphasis supplied).
#62 Paul-R
This is getting funny. You have three clips. Had you been paying attention you would know that first clip was about Fannie UNDERSTATING it income not OVERSTATING it. IOW managing its earnings like GE. While it was good they cleaned this up, earnings manipulation was an endemic problem hardly specific to the GSEs.
The second clip talks about systemic risk. Fair enough, but the real systemic risk had to do with overleveraging in financial firms not subject to CRA and things like credit derivative swaps. Long Term Capital Management almost brought down the financial system in 1998 and it had no position in mortgages, only in currency. Seriously, do you really think all that money going to AIG to pay off its casino bets to Goldman Sachs has anything to do with mortgages?
The third clip takes the cake. You think that a settlement for a couple of billion dollars in a discrimination case in 1998 (I am not making this date up) caused the meltdown in 2008? How? But wait, it’s even sillier than that. Let’s just ASSUME these loans were subprime — not likely BTW — and do the math. About 75% of all subprime loans never went in default. That means 25% or half a billion dollars in loans would have gone into default by the latest in 2000. And we’re supposed to conclude that this caused the financial meltdown of 2008?
Actually if you look at the Federal Reserve Board numbers you’ll find that the default rate for the subprime loans underwritten by the GSEs went into default at one-fifth the rate of those underwritten by financial entities not regulated and not subject to CRA. The subprime mess was not created solely or even mostly by the GSEs. It was created in large parts by unregulated non-bank banks doing really stupid things with other people’s money. I’ve never been a fan of the GSEs and their special but confusing status, but blaming them for the subprime mess is like blaming the people at AIG who work in the life insurance division for the losses generated by those in the financial services division.
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Mar 21st, 2009 (12:49 pm)#71 ThombDbhomb:
Double amen to that.
Many thanks for directing me back to nasaman’s profoundly important comment at #46. I had skipped over it without opening the link. I had hoped that President Obama’s announcement about the $$ for battery development related to the Alliance. Maybe it’s true. US made cells! What a Concept!
#73 DonC:
Thanks again. I really appreciate your hard work in debunking this particularly damaging urban legend. A true public service, IMHO.
All credit to you for having the stomach to actually look at those links and analyze them. I have to confess that I just consider the source and blow them off. Well done!
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Mar 21st, 2009 (12:59 pm)#51 Tim
That was a cool video, looked good. Wondering how it will be on load and work conditions.
The battery used by Raser is supplied by http://www.electrovaya.com/ ( a north american maker of batteries).
Raser Home page : http://www.rasertech.com/index.html
To be true : Getting a serial hybrid out is not a big deal ( i think it can be done in a year with proper licenseing of technologies and testing)
I belive GM has to understand the expectations on Volt is very high as i see all these technologies out on road.
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Mar 21st, 2009 (1:08 pm)67 Noel Park…. “If I had to choose between Citigroup, AIG, B of A, and all the rest of the 40 thieves vs. GM and Chrysler, I would choose the latter. Plus, the size of the bailouts is an order of magnitude smaller….” *
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BULLSEYE, NOEL — ONE OF THE MOST ASTUTE (YET SIMPLE & INDISPUTABLE) OBSERVATIONS ANYONE’S EVER MADE ABOUT THE WHOLE BAILOUT FIASCO!!!!!
* AIG=160B vs GM=16.6B
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Mar 21st, 2009 (1:36 pm)#72 Dave K said:
If GM really wants to have people notice the new technology they need to pull Tiger Woods off of Buick and have him drive the Volt. And don’t forget to have Woods flash that multimillion dollar smile as the electric torque kicks in.
C’ mon Tiger, how about a free bee Chevy Volt ad for America? It will cost you just 1/2 a days time and may save 500,000 jobs. How about it?
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Tiger no longer works for GM.
http://www.newyorker.com/online/blogs/jamessurowiecki/2008/11/tiger-woods-bui.html
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Mar 21st, 2009 (2:09 pm)#67 noel park Says: Hand $160 Billion to AIG on a plate and then quibble about $16 Billion to GM? And how many jobs at stake in either case?
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No one really knows how many jobs are at stake with AIG. AIG employs fewer people directly, but the collapse of AIG could very well lead to more total job losses than the collapse of GM.
Besides, comparing one to the other sort of misses the point. They are related. If AIG collapses, then then many banks would collapse, which would make financing a new car next to impossible…
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Mar 21st, 2009 (2:11 pm)#67 Noel Park…. “If I had to choose between Citigroup, AIG, B of A, and all the rest of the 40 thieves vs. GM and Chrysler, I would choose the latter. Plus, the size of the bailouts is an order of magnitude smaller….” *
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#76 Nasaman
BULLSEYE, NOEL — ONE OF THE MOST ASTUTE (YET SIMPLE & INDISPUTABLE) OBSERVATIONS ANYONE’S EVER MADE ABOUT THE WHOLE BAILOUT FIASCO!!!!!
* AIG=160B vs GM=16.6B
================================
AIG (and some others) needs to be propped up to save the world…unfortunately it became way too large in this past era of excess and is a now a necessary evil to sustain. GM is a totally diiferent animal.
AIG, BoA, Citi, etc. are essential pieces. Yes, they made hideous decisions on derivatives out of greed, and we want them to die a slow, hideous death. It may ‘feel’ good to say we should rather bailout out the domestic auto business, but it is not the right move.
Once the ‘pain’ of getting toxic assets off their books is over…they actually MAKE money, they will continue to employ many, many more Americans, and while they may never return all the money/value that has been plugged into them, the gov’t will get a return of some value.
Putting money into GM is like burning your money in a barrel, (comparatively speaking), because it does not have a superficial problem that can be cured with dollar bills.
The root base of their problem is not the economy, or a bad decision(s) influenced by greed, but the fact their business model started failing two decades ago, and had degraded so much that they were still losing billions of dollars even at the historical zenith of auto sales just before this recession/depression took over.
GM was hemorrhaging billions of dollars for the better part of a decade before this…they were already running downhill full speed to jump off a cliff to their death, this economy just sped them up to ludacris speed (basically, they went to plaid).
Even at a 20 million SAAR with the most ambitious of economic climates, there is no formula at the moment for a US based automaker to not lose money…that is the real problem here, and that fact seemingly has been lost/clouded with the distraction of this economy.
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Mar 21st, 2009 (2:19 pm)#67 noel park said:
“:Hand $160 Billion to AIG on a plate and then quibble about $16 Billion to GM? And how many jobs at stake in either case?”
================================
Not to pick on you, but thats another 16.6 billion (to last a couple months). The total cost of the bailout to GM is probably closing in on 70 billion now. 13+ billion deirect, then you got the billions to GMAC, the extra money to GM/Cereberus to get GMAC to convert to bank holding, the 17 billion-off in gov’t backed money out of TALF so they could start pissing away loans to people with 625 credit scores, the 5 billion this week to prop up the auto suppliers, etc. etc. GM could easily eclipse the total to AIG.
I would say if GM went totally under, we might net/realize 500,000 jobs lost. AIG went under tomorrow, you are probably looking at 50,000,000+, and maybe a worldwide depression developing for the next decade…the cascade would be huge.
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Mar 21st, 2009 (2:37 pm)#80 statik Says: I would say if GM went totally under, we might net/realize 500,000 jobs lost. AIG went under tomorrow, you are probably looking at 50,000,000+, and maybe a worldwide depression developing for the next decade…the cascade would be huge.
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Most estimates for a GM liquidation are much higher, like 2-3 million total jobs lost. There are a lot of indirect job losses in this scenario (waitresses, plumbers, retail workers, etc., etc.).
I have no idea how many jobs would be lost if AIG collapsed, but I know it would be huge, so 50 million is as good a number as any. Let’s just say it’s a number we would never want to find out for sure…
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Mar 21st, 2009 (2:45 pm)#79 statik Says:Even at a 20 million SAAR with the most ambitious of economic climates, there is no formula at the moment for a US based automaker to not lose money…
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This statement is a little confusing to me. When you say “no formula”, do you mean that there is no type of reorganization that would make a US based automaker viable? Are you advocating C7?
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Mar 21st, 2009 (3:07 pm)#79 & #80 statik:
Well if the game is essentially up, why are we wasting our time here?
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Mar 21st, 2009 (3:20 pm)Paul-R (#62)
This is how liberals, both democrat-socialists and NeoCon-Fascists see liberalism:
http://en.wikipedia.org/wiki/Three_wise_monkeys
Keep trying, even thought they hate the light of truth or logical arguments, more wise monkeys are waking up each and every day.
Just think of all the people who would be investing in startup E-REV companies like Raser and Aptera now that they are scared of the stock market. If they only knew they would NOT have to compete against the Big-3 with unlimited taxpayer money or worry about the central planners changing the rules over and over again.
It’s really unfortunate that liberals like Bush & Obama (Bush tripled the size of gov’t) love the power of an unlimited central gov’t funded through the other man’s purse. It’s Unconstitutional and it’s pure evil!
Good vs. evil:
Good does NOT want the power to judge or to be judged. Good knows it will be judged later. Good always wants to leave others alone. Good always wants to be left alone… or else.
Evil wants the power of judgment. Evil wants to gain control by “helping” others even when they don’t want to be “helped”. Evil thinks that it is good because it “helps” others.
Evil thinking that it is good because it “helps” others is the most deceitful lie of all, but that is liberalism.
Those who wish to control (help) us for our own good are pure evil no matter the “party affiliation”! This unwanted “help” is where all the pain and suffering truly begins and freedom/responsibility ends.
Oh well, thanks for the links.
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Mar 21st, 2009 (3:21 pm)#79 statik
We agree on the need — as distasteful as it is — to prop up the banking sector. No issue there. In fact while it’s nice to act like Senator Shelby and just say things like “let them fail”, this misses the point that if the large financial institutions fail, then all the S&Ls and regional and local banks that hold a high percentage of their assets in preferred stock of these companies would also fail.
I also agree about the sturm and drang over the amount lent to the banks. Yes the banks will recover. Yes they will make money. I’m not completely sure that AIG will ever pay off, but the others most certainly will. So I’m with your there.
What I don’t understand is why you say the GM business model can’t work. How exactly is the GM business model any different than the Toyota or Ford business model? All the models are the same as far as I can see. Some have better product than others but the basic business model seems the same.
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Mar 21st, 2009 (3:32 pm)#69 omnimoeish says “First of all, those are “initial quality” surveys.”
Er, they’re not. Third sentence: “The results were revealed as part of J.D. Power’s LONG-TERM vehicle dependability study.” (emphasis supplied).
_______________________________________________________
Ok, so surveying vehicles made in 2006 is your definition of “long term”? See that’s the problem with the American auto makers. They figure, “hey, if it makes it past the warranty without too many problems, we’re good, right?”. Anyone can make transmission and engines that last 3 years. Japanese have been looking at how to get their power trains to last 300,000 miles. Resale value (and just value in general) is going to be based on the car’s life expectancy, not if it can make it past the warranty with 5 less “problems” than Toyota.
Besides, I would also say that this survey says about as much about the demographics of the people driving these cars as they do about the car themselves. More older and prudent people are driving Mercury, Buick, Cadillac, and Jaguar than Fords, Chevys etc. This is obvious when you consider the Mercury vehicles are just Fords with a Mercury nameplate.
So, if you really want to get into this, here’s a quote from the article.
“For the first time in 15 years, an American brand — General Motors Corp.’s Buick — unseated Toyota Motor Corp.’s luxury Lexus brand as the most dependable.”
That says something about American auto manufacturing in the last 15 years, they haven’t won once with all of their 20 brands?
“Six of GM’s brands — including the company’s volume Chevrolet brand, as well as Pontiac — finished below the industry average of 170 problems per 100 vehicles.”
So, overall, this survey reiterates the point that GM is still behind the curve if 6 out of 8 brands are below average.
Don’t think I am a Japanese fanatic, I have never owned a Japanese car and never plan on owning one. I am as big a fan of GM as there is, but I’m just realistic about their notorious reliability track record.
Anyway, getting back to the point of my original post was that I thought Wagoner had improved things during his tenure and we shouldn’t write him off so quickly, but maybe I was wrong after seeing this.
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Mar 21st, 2009 (3:53 pm)Statik #80 & Dave G #81
About the 5K to 2-3 jobs lost of IF GM goes down “hard” (sudden C7) – I struggle with either of these numbers – Especially, the indirect scenario (waiters, plumbers, etc).. I’ve discussed this before, but with the current 9-10M SAAR, it’s a zero-sum game. There is too much capacity in the auto industry right now for 9M SAAR – period! – Doesn’t matter if we talking about Toyota, Honda, GM, Ford, there are simply too many auto plants and auto workers making cars.. You can’t prop that up for very long, in any sustainable manner
That said, the loss of GM (at much as I want my Volt) or Chrylser, would actually seem to me to be a blessing to Ford, Toyota and the others left standing – Ford (and others) will each pickup a percentage of the former’s GM’s sales. So the waiter that loses a job next to the GM plant, will be offset by the pickup in sales, and indirect spending from Ford and Toyota.
I work for a company that’s a tier 3 supplier to the auto industry, we sell to ALL car companies, we’re currently running about 50% total capacity, but it we sold less GM parts, and more Ford/Toyota parts, our net sales, would change very little, the mix would change (and their are different margins on different parts), but overall, our total sales dollars are tied to the 9M SAAR – not specifically to GM or Toytoa..
This is why I’m such of fan of C7ing Chrylser, sooner rather than later. Puts the fear of god in the UAW/bondholders, and the should help GM as they pickup some of the former Chrylser sales – It then allows the gov’t to just focus on one issue (GM), not two..
Am I way off base here? Besides my fandom of the Volt (why I’m here), let’s “put down”, the smaller/sicker animal: Chrysler – My sense is that will actually help everyone else, by raising all the sales of those companies still living… 9M SAAR is still 9M SAAR, we really don’ need 3 sick car companies, 2 healthier ones is fine by me, and the death of Chrysler, should help “motivate” those bondholders at GM to move off their “position of strength” (per Statik).
I’m just an SW engineer, what do I know. But we should let the “lamest” animal die a sudden/painless death…
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Mar 21st, 2009 (3:58 pm)The President needs to clean up GM quick. This is a company that has clearly lost its way. Only cars like the Volt should be allowed to continue for this backwards corporation. GM needs to start thinking more like the great auto companies in Japan and Germany. Obama needs to bring these American auto companies into the modern age of alternative propulsion methods. GM is moving in the right direction, FINALLY, but still much too slowly for Obama’s liking. The new administration needs to light a fire under GM management before it is too late to save them. I am sure with Obama’s fearless leadership he will guide this country toward EV adoption by the masses. You will be able to tell your grandchildren that Obama began the EV revolution that is now commonplace. Yes We Can. And Will. CHANGE GM !!
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Mar 21st, 2009 (5:36 pm)I sure don’t want to pay 4 bucks/ gallon of gas. Normally, I strongly disagree with government manipulations on free markets (that’s what I think got us into our current mess- ridiculously low interest rates, forcing banks to loan to people w/ bad credit, and such). However, oil is not really a free market. Oil markets are full of tariffs, subsidies, cartels, national rivalries, etc. As much as it kills me, maybe it would be a good idea to put a floor on gas at 4 bucks. I know it will make me drive less, and push us all toward EVs. Perhaps the benefits outweigh the costs…
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Mar 21st, 2009 (5:57 pm)statik #77
I know Tiger Woods and Buick are no longer making ads. What I’m saying is that Tiger should (after all the ad money GM has putted his way) do a Volt ad.
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Mar 21st, 2009 (7:06 pm)#83 noel park said:
#79 & #80 statik: Well if the game is essentially up, why are we wasting our time here?
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We are here opening the dance continues long enough to get our electric cars of course, lol.
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Mar 21st, 2009 (7:07 pm)#91 statik (me)
That should read:
“We are herehoping the dance continues long enough to get our electric cars of course, lol.”
–my edit functions seem to be down atm
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Mar 21st, 2009 (7:11 pm)#79 statik Says:Even at a 20 million SAAR with the most ambitious of economic climates, there is no formula at the moment for a US based automaker to not lose money…
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#82 Dave G said: This statement is a little confusing to me. When you say “no formula”, do you mean that there is no type of reorganization that would make a US based automaker viable? Are you advocating C7?
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I meant no formula exists under current conditions…although I am not sure even a reshuffled C10 would provide one either, it would however give them the best shot at it, so thats why I advocate it over being dissolved.
It is worth a go I think, it is necessary to try and foster job retention in this climate anyway…and if you can turn around a dog of a company at the same time–bonus.
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Mar 21st, 2009 (7:38 pm)#85 DonC said:
#79 statik
We agree on the need — as distasteful as it is — to prop up the banking sector. No issue there. In fact while it’s nice to act like Senator Shelby and just say things like “let them fail”, this misses the point that if the large financial institutions fail, then all the S&Ls and regional and local banks that hold a high percentage of their assets in preferred stock of these companies would also fail.
I also agree about the sturm and drang over the amount lent to the banks. Yes the banks will recover. Yes they will make money. I’m not completely sure that AIG will ever pay off, but the others most certainly will. So I’m with your there.
What I don’t understand is why you say the GM business model can’t work. How exactly is the GM business model any different than the Toyota or Ford business model? All the models are the same as far as I can see. Some have better product than others but the basic business model seems the same.
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Don, that is a big question to map out GM’s business model in relation to Toyota, (I’m not that thrilled about Ford either, it is GM…just a year behind I think, lol). I don’t know if I can even answer that in under 5,000 words. I’ll vaguely bullet point GM, and leave out the ‘fringe’ reasons:
Basically, GM’s model differs from Toyota’s in the following ways:
–to expand/surivive through borrowing and kiting their financing and hoping for a unknown silver bullet to somehow cure their balance sheet before the debt servicing crushes them
–to be its own competition by opening rival brands and stocking them with rebadged/restickered vehicles that are exactly the same
–flooding small/mid-sized towns with multiple dealers like your local mall that has 3 bookstores all owned by the same company, trying to make the customer’s choice you, you or you
–to green light projects based on the margin of the vehicle and hope it sells, rather than the demand of the market because you have capitulated to workers and more importantly, communities that have given you big kick backs to move to their location (rather than the more optimal, long term cost efficient locations) and now find you can no longer compete on low cost items…so you don’t offer them
The bigger issue (besides the company specific ones) of course is:
Can ANY car company make money while building cars in the US, I am not sure the answer is yes…we’d all love to click our heels together, be really, REALLY patriotic and will the answer of ‘yes’ into existence, but it doesn’t work that way. The advent of the electric car only makes this question even more difficult, as it commoditizes the automobile.
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Mar 21st, 2009 (8:52 pm)I’ve seen a few comments lately about 9M SAAR and the need to downsize production to be profitable at this market size. BE CAREFUL WHAT YOU WISH FOR!!!
I want to buy an EV (EREV or BEV) in 2011 and I don’t want to pay the market price in a 14M SAAR market with 9M production capacity. Each manufacturer’s capacity should be cut so that they can be lightly profitable at 12M SAAR but they should retain enough capacity to take profitable advantage of a 15M SAAR market. Beyond that the consumer’s would be best served by idling capacity no divesting from it. One positive side effect for any auto manufacturer that survives this downturn is that they should emerge much more nimble.
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Mar 21st, 2009 (9:32 pm)A leaner, more competitive GM would be a great benefit if it were to be successful in the restructuring. And if sales were to come back for the new vehicles GM will produce.
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Mar 22nd, 2009 (1:52 am)Bruce T Says:
March 20th, 2009 at 9:38 pm
$1 a year salary, but how many 10s of millions in “non salary compensation” The $1 salary trick is a gimmick and a joke that my 4 year old can see through.
Yea, this always gets me to, and something all the networks (cable included) seem to ignore. A managed/structured bankruptcy and those employment contracts are out the door (including Rick himself), including all those stock option grants…. it’s no surprise….
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Mar 22nd, 2009 (3:10 am)#19 Bigcitycat, what planet are you from again? The goverrnment runs a very efficient public health system in Australia. Its not perfect but no one gets turfed out for being poor. It runs on about half of the GDP than your country too! I beleive Cuba is also very good considering they HAVE NO MONEY! Stop being so narrow minded and have a look around the world and you will find it can be done, doh.
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Mar 22nd, 2009 (6:35 am)Me #95
I did a poor job of conveying my thoughts in that comment. Production capacity should be cut but not all the way down to 9M SAAR. That is an unsustainably low number and when it rebounds we would be caught short in production capacity, putting significant pressure on pricing. This is something we have to be very concerned about in this downturn, and not only with regards to automobile manufacturering. With all of the liquidity being pumped into the markets, I am very concerned about stagflation like the 1970’s and early 80’s. Commodity production is contracting at an alarming pace and we are ripening the markets for skyrocketing inflation when the economy starts to turn.
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Mar 23rd, 2009 (1:12 pm)Yep!
Lets leave the guy who lost GM millions during his tenure.
Replacing Rick Wagoner would show the public at large that GM is serious about evolving. Otherwise, it’s the same old clown show!
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