Will GM Go Belly Up?

[ethics]

Their earnings and predictions are dismal, folks, I think short of some form of protection, GM could be either bought, combined, or done. I think Ford will be close behind.

And LA Times notwithstanding, the papers that use A LOT from the car makers are already suffering what has been one of the worst sales for ads on their pages.

According to Credit Suisse First Boston analyst William Drewry, auto-dealer sales are the biggest driver of classified car ads; the more briskly cars are selling, the more they spend on advertising. He reckons that classified car ads represent about 31% of newspapers' classified revenue and about 11% of total ad revenue.

--WSJ

[Sir Joseph]

What they should do is consolidate their lines. Eliminate or phase out those lines that are not profitable, and combine others into larger groups. There's too much duplication throughout GM.

[ethics]

Well, that's one but I think what's killing GM is the unions. For example, this is the lead item in WSJ today on UAW...

General Motors Corp. stock skidded to its lowest level since 1993 after the head of the United Auto Workers said the union won't reopen its contract to reduce the auto maker's health-care burden.

In his clearest, public statement on the matter so far, UAW President Ron Gettelfinger said GM and the union routinely work to find ways to trim costs from GM's massive health-care system but the union has no plans to allow GM to change the basic health-care package it agreed to offer UAW-represented hourly workers under a four-year master contract that expires in 2007.

[Steve]

Unions fail to remember that contracts aren't death pacts.

[jimeez]

Will GM go belly up?

Leon, I really can't see this happening.

Pick a time line and we'll place friendly wager. A case of fine Scoth perhaps? ;)

[ethics]

2007, say April. For a bottle of fine Scotch shipped and delivered. :)

[jimeez]

2007, say April. For a bottle of fine Scotch shipped and delivered. :)

If you're serious....I'll take that bet.

Also, from what I am told, Toyota can't build a car without GM...add that to Daewoo, Kia, Acura, Hummer, Caterpillar, Isuzu...the list goes on.

[Domh]

There is more money in payments to medical insurance in every GM car than there is money in steel.

While this is the fault of many factions, the buck stops with GM management.

If they cannot get ahold of spending, they will get bought.

[ethics]

I am serious on the bet that GM will either be bought, combined, or done by April of 2007.

[Domh]

I am serious on the bet that GM will either be bought, combined, or done by April of 2007.

Ill bet that you win that bet.

[jimeez]

I am serious on the bet that GM will either be bought, combined, or done by April of 2007.

You're on. I agree to those qualifications. I've marked that date (4/30/2007) in my Outlook calendar along with a link to this thread.

Accept this as my hand shake. :thumbsup:

[ethics]

Cool, I will add this to the GA's Calendar. :)

[Coot]

GM owns a number of other auto makers outright and owns substantial parts of others, like Mazda and isuzu. I don't see them going south at all. They'll reorganize their American divisions and leverage technology from some of their foreign holdings. They just started doing this with the Saturn line. They were putting Opel engines in them. They cut a deal with Honda to give them license on Isuzu diesels in exchange for their Honda Pilot V6 for the Vue. Two years ago, you couldn't give the damn things away, and now they're starting to be quite popular...at least here.

Nope, not going away, but they will be forced to adapt to an ever fast changing automotive environment.

[MNeedham73]

Just a correction, Coot:

Ford owns a substantial amount of Mazda, not GM. :)

[Coot]

Oops :)

[ShinyTop]

I heard GM is about to start putting the GM label on its car lines. Suspect this is the first step to consolidation on the GM name. It may take years and this may be just a trial balloon but it would not surprise me.

[Stiofán]

They own in whole GMC, Chevy, Cadillac, Pontiac, Buick, Saturn, Holden, Adma Opel, Vauxhall and Saab, Hummer, Geo. As mentioned they have majority or controlling stakes in Isuzu, Daewoo, and Shanghi Automotive Industries Group (SAIG, the largest seller in China) and have interests or joint manufacturing agreements with Honda, Toyota, Fiat, Fuji Heavy Industires, Suzuki, VW and Renault. They also own Hughes Electronics and one of the most profitable financial firms in the US, GMAC Acceptance Corp which holds hundreds of billions in mortgages.

They're going out of business because the bond market has downgraded them. Yeah right. All because their profit is not as high as they predicted.

[MNeedham73]

I heard GM is about to start putting the GM label on its car lines. Suspect this is the first step to consolidation on the GM name. It may take years and this may be just a trial balloon but it would not surprise me.

You heard right, ST:
http://media.gm.com/servlet/GatewayServlet?target=http://image.emerald.gm.com/gmnews/viewmonthlyreleasedetail.do?domain=74&docid=13919

Detroit - In a move to link General Motors and its vehicle brands more closely, the company today announced that its corporate emblem will begin appearing on all recently-introduced and all-new 2006-model vehicles produced and sold in North America starting this month. GM vehicle brands include Chevrolet, Pontiac, Buick, GMC, Cadillac, Saab, Hummer and Saturn.

Slight OT: My Pontiac is a joint venture between GM and Toyota. All Pontiac sheetmetal and interior, but when you open the hood, there's a Toyota engine and transmission under there. The chassis is also Toyota.

[deltat2000]

Can I get a little of that action Leon?

Say a box of Avo Pyrimides http://www.davidoffmadison.com/acb/stores/1/product1.asp?SID=1&Product_ID=343
vs: some good Scotch?

:thumbsup:

[ethics]

A bottle of good scotch doesn't come close to 182 bukaroos. :P

[Biker]

Depends on the scotch! :lol:

[deltat2000]

A bottle of good scotch doesn't come close to 182 bukaroos. :P

Lets make it it an equal amount of Scotch then!

You know me Leon.....make me a counter offer...lol:cool:

Do you prefer a Lowland, or a Highland malt?

[Biker]

Screw that.. Leon, pick a good one from this list. (http://www.hartbrothers.co.uk/pages/singlemalts.htm#stay) :lol:

[deltat2000]

Screw that.. Leon, pick a good one from this list. (http://www.hartbrothers.co.uk/pages/singlemalts.htm#stay) :lol:

Damn Biker...thats a fine list! Too bad I gave up drinking long ago...lol

Might I suggest the Highland Park 35 year old to you Leon?

One of only 201 bottles....a very rare scotch with unique story...lol It would be an excelent Scotch to savor your victory with!



Distilled at
The Highland Park distillery in May 1966
& Bottled in Glasgow July 2001 aged 35 years.
At natural cask strength of 41.1% Alc/Vol.
Un-chill filtered, no artificial colouring.
Total yield from refill hogsheads
cask numbers 4622/4623, 201 bottles

The world's most northerly whisky distillery founded in 1798 by Magnus Eunson of Gallowhill. Until it was licensed in 1825, its production was illicit and Eunson was assisted in evading the tax exciseman by a church elder who hid the contraband under the pulpit. The distillery has its own floor maltings and peat beds, and two traditional peat fired kilns. During maltings a little heather is burned.

A spicy nose with slight violet overtones. A smooth well balanced malt with honey, vanilla essences and dry spices. Long lasting with a medium peaty finish.

This is a classic all round whisky that all who taste will find flavours unique to themselves.

[tke711]

They own in whole GMC, Chevy, Cadillac, Pontiac, Buick, Saturn, Holden, Adma Opel, Vauxhall and Saab, Hummer, Geo. As mentioned they have majority or controlling stakes in Isuzu, Daewoo, and Shanghi Automotive Industries Group (SAIG, the largest seller in China) and have interests or joint manufacturing agreements with Honda, Toyota, Fiat, Fuji Heavy Industires, Suzuki, VW and Renault. They also own Hughes Electronics and one of the most profitable financial firms in the US, GMAC Acceptance Corp which holds hundreds of billions in mortgages.

They're going out of business because the bond market has downgraded them. Yeah right. All because their profit is not as high as they predicted.


But it appears that the finance side of GM's business is not making much of a dent in the losses the auto side is making.

The trouble is pretty simple: The car divisions continue to rack up losses that cannot be outweighed by profits on the more profitable lending operations. Using cars as a sort of loss leader for the financing wing is nothing new, but competitor Ford (NYSE: F), for the time being, is having better luck with its banking.

Before tax effects, equity income, and minority interests, the loss came to $2.8 billion on the car side, compared with a profit of only $1.1 billion on the financing side. North American auto operations provide the lion's share of the red ink. Factor in a nearly $1 billion increase in interest expense year over year -- ah, the beauty of debt -- and you have the recipe for today's bad news.

The rest of the article (http://www.fool.com/News/mft/2005/mft05041910.htm) at Motley Fool doesn't paint a pretty picture for GM unless they turn multiple things around.

[Stiofán]

They lost a lot of money, but you have to put things into persective. They are a $145 billion in revenue business. Obviously they have loads of assets.

[ethics]

You want piece of the action, piss boy?

[deltat2000]

You want piece of the action, piss boy?

Hey! Where is our agreement on my bet?....:cool:

[Stiofán]

You want piece of the action, piss boy?

I'm hoping to still be alive in '07. If I am, you can ship me some of this. (http://www.epinions.com/content_83105713796)

[ethics]

No deal.

[ethics]

Lets make it it an equal amount of Scotch then!

You know me Leon.....make me a counter offer...lol:cool:

Do you prefer a Lowland, or a Highland malt?


I don't drink Scotch, but I can offer a good bottle of <a href="http://www.kyivpost.com/guide/readerspoll/20851/">Armenian Cognac</a>.

[FrankF]

I'm hoping to still be alive in '07. If I am, you can ship me some of this. (http://www.epinions.com/content_83105713796)

Go for four bottles of the the Red label. You can get four Red label bottles for the price of one Blue label, and after one stiff drink you can't tell the difference anyway. :lol:

[damonlab]

I certainly hope that GM never tanks that badly. That would be a horrible loss to Lansing, Detroit, and the state of Michigan. Look at what happened to Flint when they decided to move out.

[ethics]

General Motors Corp. reported a first-quarter loss of $1.1 billion -- the worst quarterly loss in more than a dozen years -- plagued by slumping sales in North America and a sharp drop in profits in China, where the torrid pace of sales has cooled.

In a surprise move, the auto maker also declined to reaffirm its earnings forecast for the rest of the year, citing its uncertainty about "key elements" of its financials, including resolution of "the health-care cost crisis" in North America. In March, GM told investors it expected to earn $1 to $2 a share, or $565 million to $1.1 billion, for the year, down from January forecasts of $4 to $5 a share.

and another article...

General Motors Corp.'s bonds had a rough ride after the company posted a $1.1 billion first-quarter loss and declined to provide a forecast for the year, heightening investors' expectations that GM credit ratings will be cut to junk.

[jimeez]

I don't have a link because it's in the most recent issue, but Money Magazine is praising GM as a good stock to buy right now. It also payed out very nice dividends compared to other companies its size.

I'll scan the article when I get home and post it.

[ethics]

Money Magazine? ;)

[jimeez]

Money Magazine? ;)I take it you're telling me not to bother as you'll discount the source anyway... :tape:

[ethics]

You can make an effort but <i>Money Magazine</i> for Economy is like <i>Newsweek </i>for Politics and Global Affairs. ;)

[Biker]

From US News and World Report - March 28


The problem at the world's biggest automaker isn't necessarily it's cars. "GM has good stuff," says Morgan Stanley analyst Stephen Girsky. "They just seem to overproduce everything." Since GM's 111,000 unionized workers earn 95 percent of their base pay if they get laid off, GM keeps its assembly lines running as long as it's not losing money on them. But as dealer lots swell with cars, discounts follow, brand image sags, and profits evaporate. GM also faces $5 billion this year in costs for retiree healthcare -- the biggest such burden of any global company. It's little wonder that GM's operating margin is the third lowest among 16 big automakers, according to Morgan Stanley.

The article goes on to state that GM must get smaller. Unions, of course, are hoping for a gradual course, but I'll lay odds that there are going to be some plant closures and job cuts in the very near future.

[jimeez]

You can make an effort but <i>Money Magazine</i> for Economy is like <i>Newsweek </i>for Politics and Global Affairs. ;)Opinion, my friend....that's your opinion.

And you would recommend what periodical for economic information?

[jimeez]

Interesting....
http://money.cnn.com/2005/05/04/markets/markets_newyork/index.htm?cnn=yes

Shares of General Motors (up $4.99 to $32.76, Research) jumped after investor Kirk Kerkorian made an $868 million tender offer for another 5 percent of GM -- a move that could end in shaking up the troubled automaker. The price -- about $31 a share -- was well above GM's closing price of $27.77 Tuesday.

[ethics]

I saw that but there are two problems with this.

1. GM will likely not heed the help.

2. There's much MUCH more bigger problems at GM than just investment. Kerkorian saw a cheap price, bought it, or rather wants to. That does not mean anything he did was right. ;)

[Steve]

Anyone heard any of those On-Star commercials? Let me say, I'm sold on them. Since GM is offerering the first year of the service free on its entire product line, we'll seriously be considering a GM vehicle next time around. It's great tech, they've got a great marketing campaign going, if they're lucky they can get their other product issues fixed within the next two or three years.

If not, I'll be buying stock in the On-Star spinoff and raking in the dividends as all the other car makers incorporate it into their models.

[ethics]

Talk to me 2 years later after you owned the car. ;)

[Steve]

I've owned two Buicks, a Century and a Regal, and had no problems with either. The Regal was pretty sweet, actually, 240 h.p., traction control, anti-lock brakes, I hated trading that in for a minivan.

The Chevy Chevette I owned out of high school was only a step up from a Yugo but it did take me from one coast to the other, twice, before I sold it to a pizza delivery guy before pcs'ing to Germany.

[mikepd]

I am not so sure that GM is going to down the tubes but it needs to get costs such as health care under control if they want to survive in this ever more competitive market.

[tke711]

Well, that "good news" was short lived:

Standard & Poor's Cuts Ford and GM Debt Rating to Junk Status (http://www.nytimes.com/2005/05/05/business/05WIRE-JUNK.html?ex=1272945600&en=90ec696fec2b875a&ei=5090&partner=rssuserland&emc=rss)

[ethics]

Yep, that was coming. :)

[Lovehound]

I am not so sure that GM is going to down the tubes but it needs to get costs such as health care under control ....
It's much the same for every employer. We have no control over health care costs, we can't do without it, and the health care industry wants more money (as we all do).

Health care costs are yet another thing that will become critcal in the next dozen or so years, when we reach the stage where only rich people and illegal immigrants will be able to get it.

[Biker]

Yes, but GM has the highest cost. $5 billion alone this year.

[Lovehound]

Yes, but GM has the highest cost. $5 billion alone this year.
Cost per employee might be a better statistic for comparitive purposes. I can't relate to $5B except "woah, lots of money!"

[Advocat]

Cost per employee might be a better statistic for comparitive purposes. I can't relate to $5B except "woah, lots of money!"

How about this then: benefit costs (both health and retiree) are roughly $1500 per vehicle sold. There are about 2 retirees for evey active worker, a problem partly caused by GM's practice over the last 10 years or so of closing plants to reduce costs during cash crunches. Of course, closing plants means having workers laid off or retiring, while at the same time decreasing the number of workers they have to produce vehicles/profits

Most analysts seem to agree GM can't use this old standby as a way to get out of their present problems, as they need all the plants they have to produce the vehicles they need to retain their market share

Unfortunately, they don't seem to learn. I've seen GM execs use benefits costs to excuse everything from poor sales to low output at plants (usually there's some mumbo-jumbo about how the money could be better used to "improve things", but no actual details, just the mystical impression that benefit costs are somehow preventing the plant/project/company from succeeding).

To me it seems the benefits issue is being used as a way to ignore the real fact... GM designs are bland and have little style or "buy me" power, and they have too many brand names, all competing for the same market segment. Low sales, too much competition between GM brands = no money.

Even if the UAW agreed to change the present benefits forumula, this isn't going to solve GM's problem; an analyst I read estimated yearly savings for GM using the formula they've suggested as coming to $950 million a year... far from the $5 billion price tag we know about. That means if GM gets the UAW to agree, the $1500 per car benefit cost would be reduced to $1200.

IMO, time for some serious changes at the top.

[jimeez]

And now for some more interesting developments.

TOKYO (Reuters) - General Motors said Monday it is not in talks about sharing technology with Toyota Motor Corp. after the Japanese auto manufacturer said it is open to supplying its hybrid technology to GM to help its ailing U.S. rival regain competitiveness. more info here (http://money.cnn.com/2005/05/09/Autos/gm_toyota.reut/index.htm?cnn=yes)

[dsl987]

Their biggest mistake is betting on hydrogen, because in my opinion it will never replace gasoline/diesel as the fuel fo choice in cars. They would be much better better off concentrating on the short term such as diesels, hybrids and ethanol.

[jimeez]

http://money.cnn.com/2005/06/07/news/fortune500/gm_closings/index.htm?cnn=yes

NEW YORK (CNN/Money) - General Motors Corp. is cutting 25,000 jobs and closing an unspecified number of plants over the next 3-1/2 years, CEO Rick Wagoner told shareholders Tuesday, as the world's largest automaker struggles to stem huge losses.

Wagoner, who is also chairman of GM, did not offer more details other than to say the troubled automaker needs to cut capacity by the end of 2008. I don't know, Leon....maybe you were onto something?

[ethics]

The cut was expected but my God 25K!?!?!?!

That number should give you an estimate of the trouble GM is in. And I still think there's more whoppers to come (not in the cuts of jobs though).

[tke711]

Ya, this is only the beginning of the rebuilding of GM.

[Lovehound]

I hope all those 25,000 jobs are union jobs! The union has sucked GM dry and forced it into a position of not being able to compete with non-union manufacturers such as Toyota, etc. This is the same damned thing as the airlines whose unions are also sucking them dry and making it impossible for them to compete with non-union airlines.

I feel sorry for people caught between the forces of unions, medical insurers and employers since it is the people who will lose.

[tke711]

I believe it was announced that the 25,000 jobs would be manufacturing jobs, so they would be union.

[Stiofán]

GM is currently operating at 85% capacity, although due to union agreements they are paying 100% of manufacturing positions.

[Arc]

No GM won't go belly up. More a question of "who" or "what" will own and run GM in the long run and whether or not and how there might be restructuring.

By the way the recent employee rate for all consumers on new cars is both a good deal for GM and a display of the financial problems they are facing which ethics so eloquently points out.

[tke711]

No GM won't go belly up. More a question of "who" or "what" will own and run GM in the long run and whether or not and how there might be restructuring.
Interesting OP/ED article here (http://www.fool.com/News/mft/2005/mft05060910.htm) that suggest Toyota could easily buy out GM, or possibly Ford.

[ethics]

Moved to Economy forum.

LOL! Looks like i have the old style here. :)

[Biker]

I fixed.. :blush:

[tke711]

While drastic incentives have helped increase GM's market share a little bit, it's looking like the employee pricing scheme isn't helping the bottom line much.

G.M. Posts Third Straight Quarterly Loss (http://www.nytimes.com/2005/07/20/business/businessspecial3/20cnd-gm.html?ex=1279512000&en=a9f7771060e65af5&ei=5090&partner=rssuserland&emc=rss)

General Motors reported a $286 million loss in the second quarter, compared to a $1.4 billion profit a year earlier. Revenue fell to $48.5 billion from $49.3 billion a year earlier. The company reported profits in all of its regional automotive businesses except North America, which had a $1.2 billion loss in the quarter compared to a $355 million profit a year earlier.

"North America continues to be hit with a number of issues," John Devine, G.M.'s chief financial officer, said in a conference call this morning, citing the company's production cuts as a key factor in its lower profits. "Our top priority continues to be the North America recovery plan," he added.

Overall, automotive operations reported a $948 million loss, compared to a $579 million profit a year earlier. The company said it had its first profitable quarter in its European operations, excluding restructuring charges, in five years.

[Swamp Fox]

I've heard rumors that a bunch of LBO companies are going to gang together like a pack of wolves and feast on GM, either as a leveraged-buyout or to break it up into its component parts.

I guess big business isn't so powerful after all.

[tke711]

Things are really starting to look even worse for GM. Yesterday, it was announced that GM has lost almost $3 billion in the first 9 months of this year, and is now considering selling off a controlling interest in it's most profitable division, GMAC. (that makes no sense to me)

Of course, they seem to think that the pending agreement with the union (story (http://www.suntimes.com/output/business/cst-fin-gm18.html)) will solve the problems, but it won't if they don't find a way to sell cars at a profit to begin with. And offering buyers of new SUV's a whopping $500 gas card isn't going to cut it.

There is a good opinion piece here (http://www.fool.com/News/mft/2005/mft05101732.htm) about their situation.

[Swamp Fox]

The equity firms should just carve it up and sell it off.

[saber11]

My guess, GM will pull a chrysler and get a government bailout

Without GM every district in the country stands to loose jobs, especially very powerfull districs of Michigan, Ohio, California, Texas and so forth.

Chrysler set the precident.

[tke711]

And the death knock continues....

GM subpoenaed in accounting probe (http://news.yahoo.com/s/nm/20051027/bs_nm/autos_gm_subpoenas_dc)

[Copzilla]

So I wonder how beneficial the unions were to the employees in all of this? Classic example of greed causing a huge amount of destruction. GM has a marketable product, but the employees AND management are raping it for all it's worth. The American way.

[ethics]

Something all of you will wake up to in the AM, at least leading the financial papers...

Emphasis are mine.

General Motors Corp., whose accounting is under scrutiny by the Securities and Exchange Commission, said it must restate financial results for 2001 and possibly subsequent years, the latest blow to the beleaguered auto giant and its chairman and chief executive, Rick Wagoner. Late last night, after the close of New York Stock Exchange trading, GM said it overstated income for 2001 by as much as $300 million to $400 million -- equivalent to about 50% of the profit it reported at the time -- by "erroneously" booking credits from suppliers. The company said its accounting for credits from suppliers is "one of the matters" being investigated by the SEC.

GM's admission ended a day in which its shares fell to their lowest level since November 1992 -- during the company's last financial and management crisis -- in 4 p.m. Big Board trading, closing down $1.23, or nearly 5%, at $24.63. Also yesterday, Fitch Ratings cut its already junk-level rating on GM's debt by another two notches.


I think someone is going to lose the bet. And that someone is not me. :)

[Biker]

Add to that that the current crop of 2006 models are uglier than SIN, they ain't long for this world. (Man, have you seen the new Impalas? BARF!!)

[jimeez]

I'm keepin' the faith....but am scratching my head at why I agreed to such a long duration. Must have been drunk that morning.

BTW, the plural of emphasis is emphases.... ;) Sorry, I couldn't help myself.

[ethics]

Ha, I knew that, I made a few grammar mistakes there. :)

[Techie2000]

Add to that that the current crop of 2006 models are uglier than SIN, they ain't long for this world. (Man, have you seen the new Impalas? BARF!!)Does that really matter? I mean people are still buying those boxy Honda things and those Scion things. I think whoever designed those should be shot.

[MNeedham73]

Funny, I thought the Impala redesign was an improvement over the last design. Same for the Monte Carlo.

[ethics]

Over the LAST design, maybe, but that's not saying much since the LAST design was an abomination.

[jimeez]

http://money.cnn.com/2005/11/10/news/fortune500/gm.reut/index.htm?cnn=yes

DETROIT (Reuters) - Shares of General Motors Corp. tumbled 6 percent Thursday, hitting a 23-year low, after Banc of America Securities warned of an increased risk of bankruptcy at the financially struggling auto giant.

The stock's decline -- which could add to pressure on Chairman and Chief Executive Rick Wagoner to launch a more aggressive revival plan for the automaker -- also came after it said late on Wednesday that it had overstated financial results for 2001 by as much as $400 million.

[tke711]

The Economist is running a good article on GM's situation:

Read it here (http://www.economist.com/agenda/displayStory.cfm?story_id=5175818&fsrc=RSS)

[saber11]

CNN reporting GM will announce plant closings today before the markets open.

[saber11]

The list is out.

The plants being closed include Oklahoma City, and the Lansing, Mich., Craft Centre in 2006, and Doraville, Ga., in 2008. In addition, some shifts will be eliminated at three other assembly plants.

[tke711]

Wow...I'm surprised that the Janesville, WI plant isn't on that list. It's the oldest GM plant of them all and produces the now slow selling SUV's.

[Swamp Fox]

GM is also closing plants in Canada. (http://www.theglobeandmail.com/servlet/story/RTGAM.20051121.wgm1121a/BNStory/Business/) Cutting costs is fine, but can it make and sell cars?

[Piobaireachd]

I like to think it's just God punishing Flint, Michigan for producing Michael Moore.

[ethics]

Oh Jimmy.....

http://www.findarticles.com/p/articles/mi_qn4183/is_20050514/ai_n14627611

[thebigc321]

I like to think it's just God punishing Flint, Michigan for producing Michael Moore.:haha: :haha: :haha:

[Steve]

You know, we looked at the Chevy Uplander. A 2005 model, bought new right now, goes for the dealer invoice price of $29,000; not a great indicator of demand, right?

If you were to trade in the same 2005 model today with 15,000 miles on it and in good condition, it'd bring you $15,000. Half it's value gone in one year and that for a vehicle in decent condition!

JD Power gives it a 2 out of 5 rating.

For our family, for our needs, GM just didn't offer anything of value. :shake:

[Lovehound]

I like to think it's just God punishing Flint, Michigan for producing Michael Moore.
It is the retail market punishing GM for GM's unavoidable obligations to their unionized workers. In a sense this is not GM's fault -- it's the union's fault. It's ironic that the very unionism that was meant to protect the workers is ultimately causing them to lose their jobs. Some might say the union workers are getting their just deserts.

They can always get jobs at Walmart or McDonalds.

[tke711]

It's more then the union. GM seems to have a knack for NOT responding to the market with the product offering. Relying on SUV sales and SUV sales alone with no plan for the consumers who are getting sick of high gasoline prices, is a sure sign of bad things to continue to come for GM.

[jimeez]

I am serious on the bet that GM will either be bought, combined, or done by April of 2007.I'm keeping the faith. They'll hold on until 4/07. :whistle:

If they don't...maybe I'll make the trip to NY and drink your reward with you. ;)

[Lovehound]

It's more then the union. GM seems to have a knack for NOT responding to the market with the product offering. Relying on SUV sales and SUV sales alone with no plan for the consumers who are getting sick of high gasoline prices, is a sure sign of bad things to continue to come for GM. Yes, I grant you that: GM has not been responding to the market, not in styling and if my experience with my '70 Corvette applies, not in support. I haven't owned an American car since 1977 for these reasons. I don't like unions but I could care less whether or not my car was made with union labor.

Consumers are sick of high gasoline prices but they are not sick of SUVs. To many (myself included, me being a back roads camping enthusiast) the SUV is the ideal vehicle, a vehicle that has appealing styling, has the ability to carry multiple passengers when necessary, and has the ability to carry the occasional large load (camping gear, taking home a new couch, etc.) without needing to rent a truck.

It is illustrative to compare SUVs to vans. The statistics say that SUVs are more popular than vans yet they share many of the same characteristics: able to carry many passengers and bulky loads. The only difference that I can see is that SUV styling is appealing, and that sitting much higher off the ground (good view) gives me a good feeling. (And also, few if any vans have 4x4 and high clearance, both a must for my camping.)

[tke711]

Since SUV sales are slowing dramatically, I'm sure you're right that it's the gas prices driving it, not consumers not liking the functionality or styling.

GM's problems are both in costs (read union) and the styling and quality. Sure, the quality has increased in the last few years, but for far too many years it was well below that of their Japanese competition and that perception will take time to go away. Time I fear, that GM may not have.

[Lovehound]

Since SUV sales are slowing dramatically...Note that slowing dramatically is vastly different than not growing or even declining, remarkable considering the increase in gasoline prices.

People want SUVs and only prohibitively expensive gasoline prices will change that.

Your second paragraph is a good, succinct explanation of GM's problems. :)

[tke711]

Sorry, I should have worded that more carefully. SUV sales have been declining, and badly.

General Motors and Ford Motor Co., each facing a deepening financial crisis, said December sales were down 10.2 percent and 8.7 percent, respectively, with steep declines in SUV sales. Demand at the two automakers was down for the year, too.

"It was good year for car sales overall, but GM, Ford suffered particularly because of the collapse of their big SUVs," Burnham Securities analyst Dave Healy said.

and...

Sales of GM's largest SUVs such as the Suburban fell 36 percent in December and were down 27 percent for the year. Sales of Ford's Explorer SUV fell 24 percent last month and 29 percent for the full year.

Source (http://news.moneycentral.msn.com/provider/providerarticle.asp?feed=OBR&Date=20060112&ID=5413515)

[Lovehound]

It would be interesting to see a statistic for overall SUV sales including Japanese and European SUVs. My heart tells me that these vehicles will continue their popularity unless gasoline prices become prohibitive. It is also important to note that gasoline prices may have temporarily dampened enthusiasm for the SUV market but consumers always adjust to prices after sticker shock wears off. Note also that gasoline prices really aren't that high when inflation is taken into account.

SUVs: Down but not out.

[tke711]

It would be interesting to see a statistic for overall SUV sales including Japanese and European SUVs.

I can't find data on all SUV's, but did find some information, which is taken from here (http://www.businessweek.com/autos/content/jan2006/bw20060112_680347.htm):

* Honda's sales were up 4.9% in 2005, thanks largely to increase in the Honda Odyssey, Pilot and Ridgeline
* 20% increase in Murano SUV sales
* Land Rover's sales increased 30% in 2005
* Subaru was up 4.6% in 2005, due mostly to the introduction of the Tribeca SUV



SUVs: Down but not out.
Since some of the foreign makers are still seeing even mild increases in SUV sales, I'd say you are correct.

Edit: Especially if we lump the CUV's in with the SUV's. The CUV market is expanding at the same rate that SUV's and MiniVan's did in past years.

[jimeez]

So Leon....what kind of Scotch do you prefer again?

http://money.cnn.com/2006/03/16/news/companies/gm_revision.reut/index.htm?cnn=yes

DETROIT (Reuters) - General Motors Corp. on Thursday revised its loss for 2005 to $10.6 billion, $2 billion more than initially reported, due to charges associated with its restructuring, the bankruptcy of its former subsidiary Delphi Corp. and its finance arm GMAC.

The company said in a statement that on a per-share basis its 2005 loss had been $18.69 when fully accounting for those charges, up from a previously reported per-share loss of $15.13.

[jimeez]

There's no way you're winning this one, Leon.....is there? :eek:

http://money.cnn.com/2006/03/31/news/companies/delphi/index.htm?cnn=yes

NEW YORK (CNNMoney.com) - Delphi announced plans Friday to throw out its union contracts and shed more than 28,000 workers as it shut down most of its U.S. operations -- moves that could spark strikes at the auto parts maker and a possible bankruptcy filing at its biggest customer, General Motors.

Delphi (Research) filed motions with the federal judge overseeing its bankruptcy proceedings to shed contracts with the United Auto Workers union (UAW) and another union that it says it can no longer afford. It also announced plans to sell or close 21 of its 28 plants.

[ethics]

It's a coming. ;)

[tke711]

Yep....especially since GM just announced that my local plant is actually going to INCREASE production of the Suburban, Tahoe and Trailblazer. Yes, those are the same trucks that are seeing dramatically lower sales. :rolleyes:

Now you see the reason for my video before. :)

[Swamp Fox]

GM is already losing nearly $1 billion a month ... GM is sitting on a vast—though shrinking—mountain of cash, estimated at around $20 billion (http://economist.com/business/displaystory.cfm?story_id=6775005)

That's less than two years.

[Biker]

Merged..

[ethics]

Hehe... how can it NOT indeed!

[Piobaireachd]

I believe in Darwinism when it comes to business. GM going under will be a blow to the economy especially in factory towns, but I believe it will make for a healthier economy in the long run.

Sometimes even major corporations need a DNR waiver.

[Swamp Fox]

Michael Moore produced the documentary, "Roger and Me", and there were books in the 60's talking abut GM and the power of big corporations. None of these works will have stood the test of time.

But the free market has.

[saber11]

How many times has a bankruptcy court thrown out union contracts? I just wonder, because the company entered into the contract in good faith.

My opinion is the judge should not throw them out and hold them to it.

[ShinyTop]

Greed is the downfall of GM, just like it was for the steel mills. Just like it has been for most tech people. Capitalism is a system that is built on greed, built on everybody getting the most they can from the system. I am not ragging on it or trying to troll, especially since I cannot see a better system on the horizon.

But capitalism requires that people use the system to get what they can. Unfortunately neither business or labor has been gifted with enough foresight to know when to quit milking the cow. Neither side has recognized that the cow only has so much milk. Management was guilty of huge mistreatment of workers with regard to hours, pay, and safety. So unions came along and rightfully attempted to even the load, to gain for their members the pay and safe working conditions that were needed.

But as we are seeing daily with the race issue, the downtrodden cannot be happy with evening the scales, they go for the gold and in the process kill the golden goose. I am not sure they even care(d) whether or not the companies they held ransom with strikes could sustain the benefits they gained. And I suppose the business interests knew all along they could close plants here and move offshore.

I don't know the answer but the fate of GM and many other iconic American companies and industries that have disappeared are the results of what gave us decades of prosperity, the almighty capitalist system and the greed that fuels it.

[Swamp Fox]

I don't know much about bankruptcy law, but I don't think a bankruptcy judge can hold a company to the union contracts - bankruptcy means that all debts are stayed, pending distribution by the trustee.

[Arc]

If they have the financial latitude to do so at this point in the game GM can not only succeed but be one of he top automakers in the world again.

From a conceptual logistical standpoint all they have to do is discontinue at least half of their car lines and models and concentrate on just certain types and make.

Look at the great success they have in dramatically turning around the Cadillac line. More of that mentality and they can still soar--if they have the time that is. They may be to far in the grave to crawl out at this point.

[tke711]

Wow....GM is reporting a $3.1 Billion loss for the 2nd Quarter (http://www.nytimes.com/2006/07/26/business/26cnd-auto.html?ex=1311566400&en=c2964443e3ba38d2&ei=5090&partner=rssuserland&emc=rss). Ouch!!!!!

[Swamp Fox]

General Motors Corp. said Wednesday it lost $3.2-billion (U.S.) in the second quarter as it absorbed heavy charges for its massive restructuring program. But the world's largest auto maker reported an adjusted profit without the charges that handily beat Wall Street estimates and its sales surged 12 per cent. (http://www.theglobeandmail.com/servlet/story/RTGAM.20060726.wgm0726/BNStory/Business/home)

There may be a silver lining in that cloud, but we'll wait and see.

[ethics]

Tick tock... tick tock...

[jimeez]

Four months to go. I foresee a bottle of Highland Park in my future. Will you be kind enough to drink it with me?

[ethics]

Looks like GM will eek through, eh?

[jimeez]

Eeking is about all they're gonna do. I got my fingers crossed though.

In other news (http://money.cnn.com/2006/12/22/news/companies/toyota_gm.reut/index.htm?postversion=2006122206).
NAGOYA (Reuters) -- Toyota Motor Corp. expects to produce a record 9.42 million vehicles next year, a 4 percent rise that should take it past General Motors Corp. as the world's biggest auto maker.

[jimeez]

So what are we using for a final date here? The 30th? :whistle:

[ethics]

I doubt it matters... what was the bet if you know off hand? I am too lazy to sift through the pages of this thread. ;)

[jimeez]

Why a bottle of scotch/whiskey, of course. ;)

[ethics]

PM me your preference on label and your address. Well done, lad.

[Swamp Fox]

Investors are beginning to think so, (http://www.forbes.com/business/2007/04/25/cars-detroit-japan-biz-cx_tvr_0426cars.html) and, quite frankly, so am I. Any ideas?

[Biker]

Merged. Again.. Stanley, bookmark this thread and add to it when you feel like dredging up the subject again.

[Swamp Fox]

Merged. Again.. Stanley, bookmark this thread and add to it when you feel like dredging up the subject again.

One thread asks if GM will go belly up, and my latest post asks if GM AND the other two will turn around - there's a difference. :biggrin:

[Biker]

There is not. Bookmark the thread........ 'Nuff said.

[jimeez]

This (http://www.cnn.com/2007/AUTOS/05/25/gm_vs_camry/index.html) surely can't help things....can it?

NEW YORK (CNNMoney.com) -- If you want to test drive a Toyota Camry or Honda Accord, starting next month you'll be able to do it at a Saturn dealership. General Motors is asking Saturn dealers to have one or more of the competing models in the showroom so customers can look at it, sit in it and drive it.

Of course, Saturn dealers can't sell you an Accord or Camry. But they hope that, when you see a Toyota or Honda sedan next to the Saturn Aura, you'll decide to buy the Aura.

I don't know about the rest of you, but you put these cars side by side, there's no competition.

[tke711]

In terms of quality, no, there is no comparison. But, in terms of amenities for the price, the Aura will beat both of them, which I'm sure is the angle GM is taking here.

[Stiofán]

GM has posted a profit of $891 million for the just ended quarter. (http://www.freep.com/apps/pbcs.dll/article?AID=/20070731/BUSINESS01/70731014)

More importantly, it's North American unit lost only $39 million, compared to $3.95 billion last year at this time.

[tke711]

I just saw that article as well and was surprised. Maybe they will be able to turn it around.

[MNeedham73]

Ford turned a profit for the second quarter as well. (http://www.detnews.com/apps/pbcs.dll/article?AID=/20070727/AUTO01/707270372/1148)

[tke711]

Must be all those suckers buying the Fix Or Repair Daily Edge. ;)

[MNeedham73]

Haven't seen too many Edges around here. Loads of Fusions, Milans, and MKZ's though.

[tke711]

True, lot's of those are running around here as well.

[Sierra Mike]

The MKZ does look relatively hot, I must say. For an American car, anyway.

SM

[tke711]

Ya, they did a decent job making a Fusion look a little better.

[ethics]

I don't feel so bad losing the bet to James. If it was close, I'd be pissed but it looks like I didn't have a prayer with this behemoth.

[MNeedham73]

Couple of folks I support drive MKZ's and love the things.

[tke711]

For around $30K for the AWD version, I can see why they like it.

[Swamp Fox]

Maybe it's time to change the title of this thread to "Will GM get back on its feet?"

I must say I'm impressed - I didn't think it could do it.

[Swamp Fox]

Well, it's official - the Big Three now make less than half of all US cars sold. (http://www.reportonbusiness.com/servlet/story/RTGAM.20070801.wauto0801/BNStory/Business/home) That said, GM is on the mend, and, if Chrysler turns around, there could be a new American Renaissance.

[MNeedham73]

I can't figure out why Chrysler is doing so bad. I see Chargers, Magnums, and 300's everywhere. Seeing a lot of Calibers and Nitros on the roads around here too now.

[tke711]

I can...most of their cars are butt ugly.

[MNeedham73]

Tastes vary. A lot of people would seem to disagree with you, Gregg :)

[tke711]

It can't be that many otherwise they wouldn't be so low on the list. ;)

[Lovehound]

I can...most of their cars are butt ugly.
That's my problem too, with all American cars. Back when I was a young adult ('70s) I used to drool over the new cars coming out each September, fantasized about which one I wanted to own and had a difficult choice of which I liked the best (I picked the '70 'Vette). These days cars (particularly American) are so butt ugly that the only last thing left that impresses me is utility.

You can blame poor economic performance on unions draining auto manufacturers' profits, but whose fault is the ugly design? Yes, perhaps most Americans like American car design better than I. I'm probably biased. I'm near buying a new car this month and it will most likely be a Toyota, my third Toyota and fourth Japanese car. I've owned only Japanese cars since I sold the 'Vette in '77.

[Kangaroo]

Tastes vary. A lot of people would seem to disagree with you, Gregg :)

Obviously not enough disagree. Nearly every Chrysler nameplate is hideous or plain stupid-looking. And then there appears to be a stereotypical Dodge driver who is not in an imitable class.