- Joined
- Apr 2, 2005
- Messages
- 14,966
- Reaction score
- 2,154
GM shares hit 60-year low on cash burn worries
- Thread starter redrumloa
- Start date
redrumloa said:
Never fear, help is at hand - I'm going to buy my first GM car! One of these (not the VXR version shown, unfortunately.
Seriously though, I don't think there's anything to worry about - any fall of GM would cause more problems than a big bank failing, so Obama isn't going to allow it.
Yeah, the General needs some help. They've been thrown under the bus for quite a while now under the Bush administration, and this latest economic and sales downturn hurts them even worse.
With the agreements GM has with the UAW, they can't really cut production without losing mega-bucks (GM ends up paying idle workers nearly as much as active ones!). Yet, they can't continue to produce vehicles they can't sell at a profit. They've run out of money to use on incentives, and can't even get credit to use to give financing bonuses. So they've got no way to entice buyers.
It's a really bad spot for them. They lose money if they over produce vehicles, they lose money if they cut production. And they are pretty much out of money, now.
With the agreements GM has with the UAW, they can't really cut production without losing mega-bucks (GM ends up paying idle workers nearly as much as active ones!). Yet, they can't continue to produce vehicles they can't sell at a profit. They've run out of money to use on incentives, and can't even get credit to use to give financing bonuses. So they've got no way to entice buyers.
It's a really bad spot for them. They lose money if they over produce vehicles, they lose money if they cut production. And they are pretty much out of money, now.
- Joined
- Aug 25, 2005
- Messages
- 5,144
- Reaction score
- 1,243
If GM makes it to 2010, which should be possible even without help, then their large healthcare expense is put onto the UAW. This will be very helpful for GM.
IMO we have to seriously question healthcare in this country. Our cost is nearly 2x higher than Europe or Canada. On top of that the uninsured critical care is paid for by the government aka USA citizens. This make manufacturing in the US cost prohibitive. GM's $1,800 per vehicle healthcare is competiting with Japanese manufactures who pay around $300 per vehicle. In a world economy in order to become more competitive we have to get our healthcare costs down it's simply business prohibitive.
Personally I'm tired of business bail outs. If there's going to be a bail out why not let the consumer decide? Instead of giving GM or Ford cash give it to us. But only if we buy a new GM or Ford. Also, make the incentives higher for higher MPG vehicles.
IMO we have to seriously question healthcare in this country. Our cost is nearly 2x higher than Europe or Canada. On top of that the uninsured critical care is paid for by the government aka USA citizens. This make manufacturing in the US cost prohibitive. GM's $1,800 per vehicle healthcare is competiting with Japanese manufactures who pay around $300 per vehicle. In a world economy in order to become more competitive we have to get our healthcare costs down it's simply business prohibitive.
Personally I'm tired of business bail outs. If there's going to be a bail out why not let the consumer decide? Instead of giving GM or Ford cash give it to us. But only if we buy a new GM or Ford. Also, make the incentives higher for higher MPG vehicles.
Well, GM is in a worse mess than I think they've let on.
From an article on the Freep (Detroit Free Press)
Ouch.... Ford's not much better off, though THEY should make it until 2010. Chrysler is currently privately held, so we don't know their condition, but they've suffered worse sales losses than GM or Ford, and have more ongoing issues with production and quality than either of them... So it can't be good.
The last manufacturing happening in the US is in very serious trouble.
It certainly does. And this has been an ongoing issue hurting the US for quite some time, now. That, and some forced hands by the UAW, has put the old Automakers in quite a bind.
And, as US citizens, we still pay for socialized healthcare for the people eligible, AND THEN we pay for our private healthcare insurance, AND STILL we pay for own doctor's bills that aren't covered under either. It needs to be addressed, one way or another.
That's an interesting thought... I like it. It's tough to consider what is and isn't American, though. Some Hondas and Toyotas have more American manufactured and assembled content than some Fords.
[/url]
- Joined
- Aug 25, 2005
- Messages
- 5,144
- Reaction score
- 1,243
There's money out there now is the time to plead impending doom. GM shouldn't be holding back.ilwrath said:
Chrysler does have quality issues. Ford and GM, not so much, they now rival the Japanese.
Certainly manufacturing workers will be happy working for the Chinese Wal-Mart.
That's an interesting thought... I like it. It's tough to consider what is and isn't American, though. Some Hondas and Toyotas have more American manufactured and assembled content than some Fords.
[/quote:vym5vc1p] Very true. Avalon for example was designed and built in the USA. Where the Focus is built in Mexico.
GM and GMAC start cracking down on the dealer network...
ilwrath said:
In the US, Toyota has about 1200 dealers, Chevrolet about 4500. But an average Toyota dealers sell about 4x as many cars as the Chevy dealer. GM wants bigger, but fewer dealers, like Toyota and Honda. Ironically, the doomed Saturn division has a better sales/dealers ratio than Toyota.
Using GMAC to pull the rug under from the dealers seems harsh though.
- Joined
- Aug 25, 2005
- Messages
- 5,144
- Reaction score
- 1,243
I think Saturn's line up is one of the nicest it's ever enjoyed. One negative on Saturn is that it never has turned a profit.smithy said:
I agree GM does have to quit dealers. It also has to quit sister vehicles. Is it really necessary to have a Malibu / 9-3x / Aura / G6 ? I understand the Malibu has won quality awards but come on here. IMO Pontiac has to go. Buick needs to go. (Buick's main competition is coffins.) Saturn might have to go to. I don't think GM can do European and American designs to save costs they are going to have to merge. GMC has 1 vehicle a truck. Cut it out! And of course Saab is little other then upscale trims and supensions in GM vehicles. (So says me the Saabaru owner)
Cutting out vehicles lines they can cut out dealers.
Does quitting sister vehicles really help the situation, though?
GM is a mess, no doubt. They really need to sort out their brands into some type of cohesive spectrum. Having all brands have vehicles in all segments just means that you're competing against yourself. But that doesn't necessarily mean doing away with the sister vehicles.
I could see GM arranged as such:
Saturn -
SEGMENT: Small, green cars. Drop the SUV/van/crossovers out of this line.
NICHE: Keep the friendly dealer image thing going on.
NOTES: I think Saturn should stay. A lot of money was spent building the brand. It seems foolish throwing that away at a time when small cars are finally coming back in fashion...
Chevy -
SEGMENT: Full product line. Base models only, low feature vehicles.
NICHE: Try to market dependable American value.
EXCEPTION: Corvette stays, and still offers upscale features.
Pontiac - (optional, depending on funds/situation)
SEGMENT: Cars only. Platforms tightly shared with Chevy. Performance features highlighted.
NICHE: Sell as an affordable driver's car.
NOTES: First optional brand on the chopping block if things go badly......
Buick - (optional, depending on funds/situation)
SEGMENT: Mid-level luxury cars and crossovers. Again, platforms tightly shared with Chevy. Basically the higher trim level, higher feature Chevy's, tuned for luxury.
NICHE: Entry level luxury.
NOTES: Second optional brand on the chopping block should things go sour.....
Cadillac -
SEGMENT: Modern Luxury
NICHE: Same
NOTES: This is probably the only healthy brand GM has. Could probably use a few of the SUV/Crossovers trimmed from the lineup.
GMC -
SEGMENT: Work Vans/Trucks
NICHE: Contractor sales, fleet vehicles.
NOTES: Is it really price prohibitive to print a GMC badge and slap it on the place you'd normally put a bow-tie? That should be the only difference between the GMC and the Chevy. This badge change can help keep fleet sales from screwing up Chevy truck resale values, though.
HUMMER - (Sell/Liquidate/Close)
NOTES: Sell it to anyone you can find. If you can't find any buyers, consider liquidation methods. It's nothing but losses and bad PR.
Saab - (Drop from US)
NOTES: This brand may be valuable in Europe. Consider how to use Chevy platforms to fill the lineup.
Opel, Vauxhall, Holden - (Overseas only)
NOTES: Again, these brands may be valuable in Europe and Australia. Consider how to fill the lineups cost effectively (platform sharing) while using as many shared parts as possible. I'm not really familiar enough with the overseas market to sort these out...
So, there you'd have it. Still a lot of sister vehicles, but that isn't a bad thing, so long as they aren't competing with each other.
faethor said:
Buick is the number 1 car seller in China, so perhaps they should just be moved out of North America rather than ditched altogether.
The sister-car nightmare has just started for GM Europe. They've launched Chevrolet and Cadillac in Europe, seemingly at the expense of moving Vauxhall/Opel's and Saab out of their core markets (mainstream and premium). It beggars belief given that Chevy and Caddie have no history in Europe and just aren't going to be able compete with Volkswagen and BMW respectively. Cadillac is a complete disaster, saleswise.
I know that picture was posted as humor... And, it was rather amusing...
But am I the only one who is sick of hearing that Detroit didn't build cars people wanted?
They built _EXACTLY_ the cars people wanted. Big, V8, gas guzzling SUVs. 8,000 lb+ towing capacity. 3 rows of seats. 4,500 lb+ curb weight. EXACTLY what the public was demanding. How do we know this? It's the only thing people were buying for years. People were willing to pay the premium prices (that the US automakers needed) for these vehicles. So clearly, these were the cars people wanted. Much to the tree-huggers chagrin.
Now, why didn't Detroit build compact cars? It's not because they were too blind, or short sighted or whatever drivel people want to spew out there. It was just simple business. People didn't want them. No one will pay a premium price for a Focus or a Cobalt. No one will pay a premium for a Accord or Camry, either. Even Toyota and Honda will tell ya, there is barely a $1,000 margin on a small car. Detroit needs over $2,500 margin just to break even because they are saddled with so much legacy costs in the form of retiree benefits, UAW agreements, etc...
So they built the cars people were willing to pay for. Hence, we are where we are.
But am I the only one who is sick of hearing that Detroit didn't build cars people wanted?
They built _EXACTLY_ the cars people wanted. Big, V8, gas guzzling SUVs. 8,000 lb+ towing capacity. 3 rows of seats. 4,500 lb+ curb weight. EXACTLY what the public was demanding. How do we know this? It's the only thing people were buying for years. People were willing to pay the premium prices (that the US automakers needed) for these vehicles. So clearly, these were the cars people wanted. Much to the tree-huggers chagrin.
Now, why didn't Detroit build compact cars? It's not because they were too blind, or short sighted or whatever drivel people want to spew out there. It was just simple business. People didn't want them. No one will pay a premium price for a Focus or a Cobalt. No one will pay a premium for a Accord or Camry, either. Even Toyota and Honda will tell ya, there is barely a $1,000 margin on a small car. Detroit needs over $2,500 margin just to break even because they are saddled with so much legacy costs in the form of retiree benefits, UAW agreements, etc...
So they built the cars people were willing to pay for. Hence, we are where we are.
