guionM

I made a toung in cheek mention that you need a scorecard to keep track of what's happening to the big 3 and who's in bad condition and who's in worse condition at the moment. So I figured I'll post where each is at the moment, and post a new thread (part 2, part 3, etc..) as things change.

So here's where things stand at the moment:


CHRYSLER

Of the big 3, Chrysler was/is the most dependent on truck sales. The entire company was funded by sales of their minivans, Jeeps, and the Dodge Ram. The Chrysler LX (the 300s in particular) were and still are the only cars that generate any significant money for Chrysler. When Damiler sold 80% of Chrysler to Cerberus, Chrysler's pension was overfunded by $2 billion. Daimler bought back all of Chrysler's bonds, leaving Chrysler 100% debt free, including penalties for retiring some debt early.

Chrysler just recently was forced to borrow an additional $2 billion although they already have money ($9 billion) in the bank. This is because of an agreement Cerberus had with Daimler as part of Chrysler's sale. Chrysler was obligated to take the money by August 3rd. So, ironically, while Ford has to sell off parts of itself to get money and while GM has to pay high intrest, Chrysler was forced to take a loan it didn't need.

On the automotive side, Chrysler is in the final stages of moving the Hornet into development. The Hornet will be a little larger than the concept, but will be the smallest car Chrysler makes (the current is the Sebring-Avenger (the Dodge Caliber is a "truck"). The Sebring gets a new hood and an improved interior next year and is due for other imporvements the following. Unlike the new Ford pickup, the new Dodge Ram isn't going to be delayed.

Dodge Viper year to date sales are up 127% (not a misprint)...367% for the month of May.
Jeep Patriot sales are up 82% for the month of May (again not a misprint)...208% for YTD.
Aspen's up 18%, Caliber's up 7% for the month. Sprinter's up 32%.

300s are down 59% for the month, PT's are down 48%. Dodge Ram, by comparison to everything else (including competitors) is down a modest 27%.



FORD

Alan Mulally recently pulled rank and pretty much overruled the entire Ford senior establishment that viewed the US market as too conservative and too unsophisticated to have Ford's good overseas products. Ford will be building the European Focus and Fiesta here, as well as a van Ford currently makes in Europe. Ford will also base the Fusion replacement on the European Ford Mondeo, as well as add a 2nd plant to produce the Focus top meet current demand. Ford is also developing a new smaller pickup, the F100, which apparently is much along the same type of truck as the Dodge Dakota which Chrysler seems to have been neglecting for the past few years.

Ford recently delayed introduction of it's redone F series trucks to help clear out the backlog of existing F series trucks (down 30% for the month, 18% for the year). Ford expects to lose more money this year than it did last ($2.7 billion), and expects to break even next year.


On a relative basis, Ford is overall in pretty decent shape for a recovery. The Fusion and Focus have hit record sales. Focus sales are up 37% YTD (53% for the month) and was last month a mere 10K vehicles behind Ford's best selling vehicle, the F series truck! Fusion is up 27% last month and in May outsold Mustang 2 to 1.

Ford's weakness is clearly due to it's decline in truck sales. Ford's car sales are up. 2.8% for the year....13.3% for the month.


GM

GM is expected to drain more than $10 billion this year and apparently needs $12-14 billion annually just to operate. GM stocks are at their lowest level since December 1974 when adjusted for stock splits. GM's shares are running around $11. In the past year GM stocks went as high as $43. GM's 75% drop of it's high stock price is mare dramatic than Ford's roughly 50% drop. Although none of the big 3 are healthy, GM seems to be the sickest at the moment. While Chrysler is getting money it arguably doesn't need, and Ford still has significant cash, credit, and Volvo still available to be sold off, GM is no doubt going to need additional borrowing to make it through the next couple of years.

GM is at the point of bad news right now because of their huge change in finances recently and other news that's less than encouraging. GM announced the shelving of the next gen truck redesign. The highly publicized Volt isn't going to be selling in the $20K range, but will be sold for at least 10 grand more.

Ironically, on the sales front, compared with it's competitors, GM has alot to be thankful for. Malibu sales are up 39% over last year. Cobalt 19%. Chevrolet overall is down only 4.6% (1% for the entire year so far) and is outselling Ford. Cadillac's car sales are actually up nearly 7% for the year. G6 sales are up 9% over last year and 20 YTD.

Ironically...again... GM's division best positioned to take advantage of incresed fuel prices is suffering a bloodbath in sales. Saturn's car sales are down 32% for the year, and a staggering 45% for the month of May. Best guess is because Saturns although small and economical are also pricey when compared to Chevrolet and Ford vehicles in the same class.



Overall:

Chrysler:
needs cars ASAP! The LX was their bread and butter car. The PT cruiser is almost 10 years old already. The Sebring as is isn't going to cut it. Chrysler has money in the bank, no real debt, and now has a link with both Nissan and by association, Peugeot. Short term, like everyone else, Chrysler is going to burn money. However, having these associations and being run by an investment company, Chrysler's long term prospects currently seem pretty decent.

Ford:
Alan Mullally recently did what he should have done when he first got to Ford: overrule the shortsighted people who got Ford in trouble in the first place. Ford is actually using it's excess capacity to convert plants to build Ford's overseas cars here. Ford has cash from it's sale of Jaguar and Land Rover as well as morgaging it's entire operations. This puts Ford in a position to make some extreme moves which actually seem like common sense moves. 1) Move quickly to adapt to the market, 2) get your best products over here to the biggest market. If Ford doesn't run out of cash before everything turns around (they have nothing left to morgage save Volvo), a smaller Ford Motor Company should be a solid moneymaker.

GM:
They seem to have the worse news of all 3 and seems to be in the worse condition. GM's problem is that to survive, phenominally quick decisions need to be made and this favors powerful central commands. Allan Mullally at Ford has that power. Cerberus almost dictates that power to Chrysler's 3 executives under threat of termination. General Motors Corperation's decision making structure simply doesn't allow that and never will. Even the title of "Car Czar" still means that wide parts of GM's kingdom has to be convinced to back any plans. There is no one at GM who can almost unilaterally decide to convert a plant to making Opels here in the US. While Chrysler teamed up with Nissan easily, Bob Lutz had to go through fire, brimstone, and a mindnumbing amount of studies and cost analysis presentations just to use Opel Astra as a Saturn.

GM's problem isn't that it doesn't have the resources, or the people. GM's enemy is what it always has been even from the days of Ross Perot's brief tenure there. GM is by nature an inefficient and bureauacratic organization that has to be in top panic mode to get anything done. And even in that mode, you tend to get every division pulling in different directions.

What GM needs right now more than anything is for the board to empower Wagoner & Lutz (finance and automotive), and tell them to do whatever it takes to turn this around as quickly as humanly possible, even if it means closing departments and kingdoms, as well as the power to overrule.

If that doesn't happen, it's going to be extremely difficult for GM to turn around. IMO, of the 3 GM faces the biggest threat.

Dragoneye

What do you think the chances are that that happens?

Z284ever

Great post Guy!

I really agree with the part about GM not having the ability to make quick, decisive, decisions, along the lines of Ford's Mulally. This is no time for (non)decisions by committee. Something GM is culturally predisposed to.

BTW, I'm sure you meant Renault and not Peugeot.

94LightningGal

I agree with what you are saying, with one exception. I really don't think that Chrysler is really admitting to the current situation with fuel prices. Their speech about the launch of the '09 Ram is almost scary......... and just reeks of Ostrich "head in the sand" wishful thinking. They are talking that lower truck sales are just an anomoly, and will bounce back after a short low period.

If they are banking on this, they are in much bigger trouble than it really looks like.

That said, good post. I really wouldn't expect alot of response to it. It would seem that, after the initial uproar, most have put their rose colored glasses back, firmly in place............. as the amount of "everything is going to be fine," "everything is going to be great," is almost frightening. It sounds almost as bad as GM's board does sometimes.

guionM

Dragoneye, I think the chances of that happening are pretty much sub-zero. If GM's stock can drop 75% within a year with no structural change, I'm under no illusion about it changing if things get worse... which it will. Still, it's what GM needs.

LightningGal, if the only thing Chrysler was depending on was the Ram, and they had very little else in the pipeline, I'd also be alarmed. However, Chrysler has also said publically that they need to focus on cars. Chrysler CEO Robert Nardelli early on seemed to grasp what was wrong with Chrysler was they needed better quality of materials and better NVH in their cars. Chrysler's new minivans had an 11th hour revision of materials before they went into production. Upgrades are supposed to show up in the MCE Sebring. Hornet (a car Daimler essentially killed off) moved ahead towards production. I'd rate Chrysler's enthusiastic boasts on the Ram alongside that time Chrysler's chief designer said that coupes were dead in response to complaints about the Charger name being stuck on a sedan.

Charlie, yep. I meant Renault and not Peugeot. My bad.

SharpShooter_SS

Good post..... what I find most ironic is that only a short year or two ago GM was seen to be in the strongest position of the three with nice new product in the pipeline....

Eric Bryant

Of the three, Ford seems to be the only one that has a chance of making its own destiny.

GM simply can't introduce enough new product at once to fill all the holes in its lineup; that should be obvious by now. The company also has the worst damn balance sheet of any company currently in business.

Chrysler's future likely looks like divesture. That's just what private equity does, and there's not any concern for things like job or history or culture.

This idea of constantly comparing the relative health of the Big 3 is growing tiring to me. If I'm in the hospital and I'm really sick, I don't get any healthier if the guy in the bed next to me is just a bit closer to dying. This isn't some zero-sum game where there's inverse relationships in the fortunes of the participating companies.

Plague

Good post, but sort of uninformed about Saturn. Its sales drops are due to no more Ions and poorly advertised Astras. Aura sales are up, Sky sales are down which is no surprise.

shock6906

Are they planning to do anything with the interior of the Sky? That's the biggest complaint I've heard from anybody about them. In fact, my stepmom was about to buy one, but she was put off by the interior. She opted for an S2000 instead.

dav305z

I agree 100 percent with your conclusion that GM needs to act quicker and more decisively, but am a bit wary of keeping a "scorecard" of the Big Three. It does not reflect the current status of all three companies so much as it echoes the latest news reports. A few months ago, GM had the same cash burn problems they do now, but the media decided they were the healthiest. Now it's Ford, even though the F-150 is getting hammered and tons of white collar workers are getting the pink slip. Tomorrow it will be Chrysler, even though most of their car products are a full generation behind the competition (drive a Sebring and you'll see what I mean). In fact, I'm guessing the employees at each company would give you similar reports.

I think GM is in better shape than people currently think for one big reason: product. Product is king, and GM is undoubtedly ahead of its domestic rivals, especially Chrysler. Their car lineup in particular is more battle ready. Mid-size isn't close. It's great that Ford is bringing over its European small car but GM has one here now and will have the new Cobalt on the market in time to compete with the new Focus. Right now the economy is tanking, so the company with the least fluidity is getting hammered. But once the market recovers a bit, and people start buying cars again, GM will be in the best shape (and if the economy doesn't recover they'll all be out of business).

I think one of GM's biggest problems right now is marketing. Do people even know the Astra exists? What about the Cobalt - it's old but certainly still better than the Focus. GM needs to really focus on pushing its products. Of course, given the company's aforementioned lethargy, who knows if this will ever happen.

ProudPony

Couple things to add to the pot...

1) NOBODY is talking about the liability Chrysler has on the line with their $2.99 gas program. If oil and gas keep going up at current rates, they will lose their shirt buying gas at $6 and selling it at $3 - even if it is only for 12k miles/year for 3 years. I see $10s of million$ in liability and risk on the table with this program. Not good.

2) The LX cars mentioned are great cars. They are also becoming old cars.
When was the 300 last renewed?
When ws the PT last renewed?
Wonder why their sales are down 59% and 48% respectively?
The 300 was a cutting-edge car when introduced, and people flocked for them - same with the PT. IMO, the novelty has worn off and demand is tanking. Do they have the cash to revamp and retool these lines, or will Chrysler let them rot on the vine like Ford did the Taurus? I can tell you what I think will happen.

3) Ford... Instead of hitting details randomly, let me do this....
* F150 production will begin in August at KC and September in Dearborn as opposed to July. There's the big "delay". In addition, 1 shift will be cancelled at each plant. Dearborn truck will be idle most of the 3rd quarter.
* Michigan truck will be idled for 9 straight weeks starting 23June. (they produce big SUVs)
* Louisville will drop 1 shift of production for the 3rd quarter (mid-SUVs).
*Line speed reductions will occurr at KTP (superdutys) and Chicago (full sized sedans)
* Oakville is adding a 3rd shift to make more Edge, MKZ and Flex vehicles
* KC line producing Escape, Mariner and hybrid versions is also adding a 3rd shift
* Wayne Assembly is adding a 3rd shift to their paint line and line speed will be increased for Focus production.

One last thing - the Fiesta will not be built here, it will be built in Cuautitlan, Mexico - they are currently procducing full-sized trucks for Mexico and US markets. Expect Fiesta for early '10 sales.

I have to plead the 5th on GM right now. Though I am working on some new stuff for them, I am not in the details of their business like I am the others right now. All I know is that the GMT-900 platform will go through several incremental changes over the next 3 years as opposed to doing a full-new platform like previously proposed - that's been publicly announced.

I am liking what I see from Ford at the moment. I like what I see at Chrysler when I see something product-related... I don't like the gas program though.
GM - I simply hope they pull their small car programs into high gear.

Plague

I hope so, or they might redo the car completely. I think an interior overall will come first.

flowmotion

I would have assumed that Chrysler bought the gas on the futures market, so their risk is already covered here. Is this really the case?

ProudPony

How did they know how much to buy? How many cars/trucks they would sell under the program?
And who would sell them THAT much gas at a fixed price KNOWING the price on the market would go higher?!?!

I doubt they have the futures to cover it. Just my opinion.

Eric Bryant

It's Chrysler, so they're not selling many vehicles, and since the gas program took the place of normal incentives (which total several thousand dollars on most Chrysler vehicles), it probably was a net wash.

And even if it ends up costing Chrysler several tens of millions beyond their normal incentives, that's a drop in the bucket compared to rest of the company's debt. You're talking about a company that had to issue an official statement last Friday denying the bankruptcy rumors that have been flying around for the last several weeks. If they go down in flames, it's probably not because of an ineffective and relatively little-known incentive program.