Sobering word by the AUTOEXTREMIST.
Registered User
Joined: Jul 2001
Posts: 1,808
From: FL/MI
Well Adam... I will work my *** off to see that my part of the industry doesn't crash. They will have to lock the doors to stop my efforts.
Registered User
Joined: Apr 2001
Posts: 3,698
From: USA
FWIW..I think Wagoner needs to do. While he is a nice enough guy...I think if GM brought in someone competent at the top it would give them a little breatheing room and credibility. Seems like Wagoner has been turning GM around for a decade now..and irregardless of the changes he has made...the industry seemingly has lost confidence in him at this point.
Registered User
Joined: Jan 1999
Posts: 1,547
From: Panhandle of West Virginia
DETROIT -(Dow Jones)- Getting a lease deal on a Chevrolet or Buick is all but impossible these days. And car buyers can forget about getting free financing on a Ford.
But anyone in the market for a Honda, Toyota or Nissan is getting wooed with unprecedented deals, from no-interest loans to cheap leases on popular models like the Honda Civic.
Detroit's Big Three auto makers, strapped for cash and unable to extend generous deals touted by many of their foreign-based rivals, face a growing competitive disadvantage. It's the latest setback in Detroit's fight to hang on to its fast-shrinking corner of the U.S auto market.
"These import companies are hitting the domestics where it hurts most and offering financing where the others can't," said Jessica Caldwell, industry analyst at Edmunds.com. "If they, the domestics, lose people to Toyota, Honda and Nissan, and these customers realize, 'Hey, these are good cars,' they may be lost forever."
Domestic auto makers had hoped to at least maintain their share of the market in the face of a widespread industry slump. Success on that front would have put the companies in a better position to recover when the market rebounded.
Instead, domestic companies' market share through October fell 4 percentage points to 47% compared to a year ago, a massive drop by auto industry standards, where every tenth-of-a-point earned is cause to brag. Asian brands, meanwhile, accounted for 45% of U.S. auto sales, up from 42% a year ago.
General Motors Corp. (GM), especially, has emphasized hanging onto to market share as a key goal in the face of sinking sales. A well-received employee- pricing-for-all sale in September pushed GM's share to 27%, the highest of 2008. But in October, after the sale ended, GM's share sank to 20%, just one percentage point above Toyota Motor Corp. (TM) on the home turf GM has long dominated.
While economic turmoil has pushed the entire U.S. market to lows unseen in decades, U.S. auto makers are bearing the brunt of the loss, a trend that will likely accelerate as credit and cash flow troubles impede their ability to woo jittery consumers.
Consumers rattled by the crashing housing market and meltdown on Wall Street are putting off big-ticket purchases such as new vehicles. Those who are willing to buy are having a tough time securing credit as lenders clamp down on loans, requiring high credit scores and big down payments.
GM has been hit especially hard because its finance arm, GMAC Financial Services, has clamped down on auto loans in the face of massive losses. Unlike Ford Motor Co.'s (F) Ford Motor Credit, GM doesn't have a controlling stake in GMAC, which is also reeling from losses in its mortgage lending business. The auto maker sold 51% of the lender to Cerberus Capital Management LP in 2006.
Toyota, Honda Motor Co. (HMC) and Nissan Motor Co. (NSANY), are hurting from the same factors, but those auto makers and their finance arms have much stronger balance sheets to help them weather the downturn.
New Yorker Meredith Rackoff, who works for a Manhattan bank, epitomizes Detroit's dilemma.
For three years, she has leased a compact Chevrolet Cobalt, never missing a monthly payment. The lease runs out in December and Rackoff, happy with the car and looking to stick with a domestic model, asked GMAC if she could extend the lease six months to keep the Cobalt.
Instead, she says, she was told she could get no more than a month extension - unless she had already purchased a new GM vehicle - and that her rate would go up by $25 a month.
"They told me policy is policy and there are no exceptions," said Rackoff, who is now considering buying a car from another auto maker. "All they would have to do is take my check and cash it instead of just having my car sitting on a lot somewhere.
"To me, it just defied logic."
In rolling out financing and discount deals, the Japanese auto makers are undercutting a key tool domestic manufacturers have used to compete.
The shift comes after years of work by the Detroit auto makers to level the playing field on vehicle quality and labor costs. Domestic companies have made major strides - from improved quality rankings by publications such as Consumer Reports to a landmark cost-cutting labor deal with the United Auto Workers.
Now, hamstrung by their inability to offer cheap loans, they face a new hurdle.
"A lot of people have been turned off by what the domestics are offering, with no leasing and requiring high credit scores," Edmunds' Caldwell said. "On the other hand you have Toyota out there with national commercials saying, 'Financing is not a problem. We will work with you.' "
-By Sharon Terlep, Dow Jones Newswires; 248-204-5532; sharon.terlep@ dowjones.com.
But anyone in the market for a Honda, Toyota or Nissan is getting wooed with unprecedented deals, from no-interest loans to cheap leases on popular models like the Honda Civic.
Detroit's Big Three auto makers, strapped for cash and unable to extend generous deals touted by many of their foreign-based rivals, face a growing competitive disadvantage. It's the latest setback in Detroit's fight to hang on to its fast-shrinking corner of the U.S auto market.
"These import companies are hitting the domestics where it hurts most and offering financing where the others can't," said Jessica Caldwell, industry analyst at Edmunds.com. "If they, the domestics, lose people to Toyota, Honda and Nissan, and these customers realize, 'Hey, these are good cars,' they may be lost forever."
Domestic auto makers had hoped to at least maintain their share of the market in the face of a widespread industry slump. Success on that front would have put the companies in a better position to recover when the market rebounded.
Instead, domestic companies' market share through October fell 4 percentage points to 47% compared to a year ago, a massive drop by auto industry standards, where every tenth-of-a-point earned is cause to brag. Asian brands, meanwhile, accounted for 45% of U.S. auto sales, up from 42% a year ago.
General Motors Corp. (GM), especially, has emphasized hanging onto to market share as a key goal in the face of sinking sales. A well-received employee- pricing-for-all sale in September pushed GM's share to 27%, the highest of 2008. But in October, after the sale ended, GM's share sank to 20%, just one percentage point above Toyota Motor Corp. (TM) on the home turf GM has long dominated.
While economic turmoil has pushed the entire U.S. market to lows unseen in decades, U.S. auto makers are bearing the brunt of the loss, a trend that will likely accelerate as credit and cash flow troubles impede their ability to woo jittery consumers.
Consumers rattled by the crashing housing market and meltdown on Wall Street are putting off big-ticket purchases such as new vehicles. Those who are willing to buy are having a tough time securing credit as lenders clamp down on loans, requiring high credit scores and big down payments.
GM has been hit especially hard because its finance arm, GMAC Financial Services, has clamped down on auto loans in the face of massive losses. Unlike Ford Motor Co.'s (F) Ford Motor Credit, GM doesn't have a controlling stake in GMAC, which is also reeling from losses in its mortgage lending business. The auto maker sold 51% of the lender to Cerberus Capital Management LP in 2006.
Toyota, Honda Motor Co. (HMC) and Nissan Motor Co. (NSANY), are hurting from the same factors, but those auto makers and their finance arms have much stronger balance sheets to help them weather the downturn.
New Yorker Meredith Rackoff, who works for a Manhattan bank, epitomizes Detroit's dilemma.
For three years, she has leased a compact Chevrolet Cobalt, never missing a monthly payment. The lease runs out in December and Rackoff, happy with the car and looking to stick with a domestic model, asked GMAC if she could extend the lease six months to keep the Cobalt.
Instead, she says, she was told she could get no more than a month extension - unless she had already purchased a new GM vehicle - and that her rate would go up by $25 a month.
"They told me policy is policy and there are no exceptions," said Rackoff, who is now considering buying a car from another auto maker. "All they would have to do is take my check and cash it instead of just having my car sitting on a lot somewhere.
"To me, it just defied logic."
In rolling out financing and discount deals, the Japanese auto makers are undercutting a key tool domestic manufacturers have used to compete.
The shift comes after years of work by the Detroit auto makers to level the playing field on vehicle quality and labor costs. Domestic companies have made major strides - from improved quality rankings by publications such as Consumer Reports to a landmark cost-cutting labor deal with the United Auto Workers.
Now, hamstrung by their inability to offer cheap loans, they face a new hurdle.
"A lot of people have been turned off by what the domestics are offering, with no leasing and requiring high credit scores," Edmunds' Caldwell said. "On the other hand you have Toyota out there with national commercials saying, 'Financing is not a problem. We will work with you.' "
-By Sharon Terlep, Dow Jones Newswires; 248-204-5532; sharon.terlep@ dowjones.com.
Registered User
Joined: Nov 2002
Posts: 561
From: Charlotte NC
Why we should not invest in GM
Posted Nov 13th 2008 11:30AM by Peter Cohan
Filed under: Bad news, General Motors (GM), Toyota Motor Corp. (TM), Recession
General Motors (NYSE: GM) can't compete in the global automobile industry. In the 1960s it had 50% market share, now it has 20%. Yet the management culture at GM hasn't much changed in the last 50 years. This despite the emergence of powerful global competitors, like Toyota Motor Corp. (NYSE: TM), which is poised to take over the global market share lead this year. That's why it would be a bad bet to put taxpayer money into GM.
It seems popular to blame the UAW for GM's problems. But as I posted in January 2006, GM can't compete for a variety of reasons. GM used cars as a loss leader for selling the more profitable leases. For the first nine months of 2005, GM limited its $6 billion in vehicle operating losses due to the $2.2 billion it made financing those vehicles. It was trying to cut capacity by 19% -- since 20% of its factory capacity was idle -- as its stock lost 44% and ratings agencies cut its debt to junk status.
By contrast, Toyota beat GM on every measure that mattered. Its stock was up 30% for the year; its products led on initial quality surveys, and consumers paid 14% more for Toyotas than for GM cars. Toyota also built its cars 7% faster and enjoyed a per car cost advantage of between $300 and $500 over GM. Toyota's cars were so popular that its factories were operating at 100% of capacity -- yielding a $1,488 per vehicle profit compared to GM's $2,300 per vehicle loss.
This brings me back to whether taxpayers should invest in GM. It has been steadily bleeding market share and losing billions -- $73 billion in the last few years. Its management culture is frozen in the 1960s so it will keep trying to do the same thing it has always done. I believe there is nothing that anyone can do to change that culture.
Despite the claims that 2.5 million jobs will be put at risk, I think the U.S. would be better off not throwing away billions of dollars by giving it to the executives who have overseen a 95% drop in GM's value since 2000. Perhaps we can convince better run global competitors to purchase GM's factories and work with its suppliers. For those who do not get jobs with a new owner, we can provide funds to retrain them for other industries -- such as making wind turbines.
Peter Cohan is President of Peter S. Cohan & Associates. He also teaches management at Babson College. His eighth book, You Can't Order Change: Lessons From Jim McNerney's Turnaround at Boeing, will be published by Portfolio on December 26, 2008. He has no financial interest in the securities mentioned.
Posted Nov 13th 2008 11:30AM by Peter Cohan
Filed under: Bad news, General Motors (GM), Toyota Motor Corp. (TM), Recession
General Motors (NYSE: GM) can't compete in the global automobile industry. In the 1960s it had 50% market share, now it has 20%. Yet the management culture at GM hasn't much changed in the last 50 years. This despite the emergence of powerful global competitors, like Toyota Motor Corp. (NYSE: TM), which is poised to take over the global market share lead this year. That's why it would be a bad bet to put taxpayer money into GM.
It seems popular to blame the UAW for GM's problems. But as I posted in January 2006, GM can't compete for a variety of reasons. GM used cars as a loss leader for selling the more profitable leases. For the first nine months of 2005, GM limited its $6 billion in vehicle operating losses due to the $2.2 billion it made financing those vehicles. It was trying to cut capacity by 19% -- since 20% of its factory capacity was idle -- as its stock lost 44% and ratings agencies cut its debt to junk status.
By contrast, Toyota beat GM on every measure that mattered. Its stock was up 30% for the year; its products led on initial quality surveys, and consumers paid 14% more for Toyotas than for GM cars. Toyota also built its cars 7% faster and enjoyed a per car cost advantage of between $300 and $500 over GM. Toyota's cars were so popular that its factories were operating at 100% of capacity -- yielding a $1,488 per vehicle profit compared to GM's $2,300 per vehicle loss.
This brings me back to whether taxpayers should invest in GM. It has been steadily bleeding market share and losing billions -- $73 billion in the last few years. Its management culture is frozen in the 1960s so it will keep trying to do the same thing it has always done. I believe there is nothing that anyone can do to change that culture.
Despite the claims that 2.5 million jobs will be put at risk, I think the U.S. would be better off not throwing away billions of dollars by giving it to the executives who have overseen a 95% drop in GM's value since 2000. Perhaps we can convince better run global competitors to purchase GM's factories and work with its suppliers. For those who do not get jobs with a new owner, we can provide funds to retrain them for other industries -- such as making wind turbines.
Peter Cohan is President of Peter S. Cohan & Associates. He also teaches management at Babson College. His eighth book, You Can't Order Change: Lessons From Jim McNerney's Turnaround at Boeing, will be published by Portfolio on December 26, 2008. He has no financial interest in the securities mentioned.
Registered User
Joined: Jul 2001
Posts: 1,808
From: FL/MI
Not sure what Cohan means by that.
I am not comfy that the US will find a "Global" company or companies to take over the plants and fill the void. I don't think he grasps that the transplant car makers are not here for the cheap labor...
Traditionally you don't spend on PR when it isn't required. According to some of the sentiment here, the Far East companies are too sharp to do that. They could just as easily shutter the plants here and make more money.
I appreciate his suggestion that dislocated workers can build wind turbines...
Gosh, I wonder what his political slant is...
I am not comfy that the US will find a "Global" company or companies to take over the plants and fill the void. I don't think he grasps that the transplant car makers are not here for the cheap labor...
Traditionally you don't spend on PR when it isn't required. According to some of the sentiment here, the Far East companies are too sharp to do that. They could just as easily shutter the plants here and make more money.
I appreciate his suggestion that dislocated workers can build wind turbines...
Gosh, I wonder what his political slant is...
Thread Starter
Registered User
Joined: Nov 2000
Posts: 16,176
From: Chicagoland IL
One must ponder if the government we have here is learning anything from the plight of the big three? By that I mean is there any ground swell in this past election regarding how uncompetitive you become when you pay folks not to work? That covering everyone's health expenses is not affordable, or sustainable? That making more money than you spend is a very key component to providing any retirement checks for everyone? Anybody voicing that entitlements are cretainly the sign of a caring and generous entity, but total idiocy in the context of a "world" economy?
Any thoughts which were affirmed through votes which we can point out which affirmed the wronheadedness of attempts to be everything to everyone? ...That to attempt to do so is actually the opposite of being lean and mean?
Lean and mean is the way business and thus being competitive works now, but I doubt our government got the memo. I know the majority of voters certainly didn't get it. They will though... they will.
Without some serious soul searching and application of common sense the USA will learn a lot about what "lean and mean" involves.
The bank bailout certainly covered the *** of foreign government's deposits. Some american citizens got a handout too in the process. Sure, getting a loan if you are good for the dough has disappeared, but at least China and Japan won't pull a run on the banks...
Any thoughts which were affirmed through votes which we can point out which affirmed the wronheadedness of attempts to be everything to everyone? ...That to attempt to do so is actually the opposite of being lean and mean?
Lean and mean is the way business and thus being competitive works now, but I doubt our government got the memo. I know the majority of voters certainly didn't get it. They will though... they will.
Without some serious soul searching and application of common sense the USA will learn a lot about what "lean and mean" involves.
The bank bailout certainly covered the *** of foreign government's deposits. Some american citizens got a handout too in the process. Sure, getting a loan if you are good for the dough has disappeared, but at least China and Japan won't pull a run on the banks...
As for the rest, I look at all of these bailouts with quite abit of trepidation. I personally believe in the principals of Capitalism, and what we're doing here is really the opposite. Let's hope our new government handles things responsibly, and doesn't use this to facilitate the "mother of all porkbarrel power grabs". We ALL need to be watching their actions very carefully.
Prominent Member
Joined: Dec 1999
Posts: 2,282
People seems to believe that if they can't come up with actual facts, then simply repeating a mantra over and again will somehow make it true...like "change" for instance.
To make substantiative changes at GM it takes BILLIONS of dollars....dollars they simple do not have due to current market conditions.
Registered User
Joined: Mar 2001
Posts: 13,713
From: The Golden State
I concur.
Although GM's culture hasn't exactly been proactive in changing, and still seems to be behind where it needed to be until the walls started caving in, comparing it to the 1960s is pure hogwash.
I'd say IMHO it's about 5 years behind where it should be, but 1960s? Who writes this stuff??
Although GM's culture hasn't exactly been proactive in changing, and still seems to be behind where it needed to be until the walls started caving in, comparing it to the 1960s is pure hogwash.
I'd say IMHO it's about 5 years behind where it should be, but 1960s? Who writes this stuff??
Registered User
Joined: Jun 2004
Posts: 2,977
From: SeVa
And the value of letting that happen is?????????????
Alot of people on here will probably attest to me being in the top 5 free market oil loving no taxing nut swinger brigade and I cant see the value in letting one of our most important industries die off and the attendant problems it would introduce.
Alot of people on here will probably attest to me being in the top 5 free market oil loving no taxing nut swinger brigade and I cant see the value in letting one of our most important industries die off and the attendant problems it would introduce.
Banned
Joined: Mar 2001
Posts: 1,938
And the value of letting that happen is?????????????
Alot of people on here will probably attest to me being in the top 5 free market oil loving no taxing nut swinger brigade and I cant see the value in letting one of our most important industries die off and the attendant problems it would introduce.
Alot of people on here will probably attest to me being in the top 5 free market oil loving no taxing nut swinger brigade and I cant see the value in letting one of our most important industries die off and the attendant problems it would introduce.
Is there a value in propping up a business that has failed? Maybe...but not if they are going to persist in using the same, failed business model.
Maybe GM will surprise me and truly reinvent itself but I'm not holding my breath (even though some here would probably like me do so or would be willing to help).
Registered User
Joined: Apr 2001
Posts: 3,698
From: USA
That's 90% of the issue here. You have people making snap judgements about issues they don't understand. They are just repeating buzz words they see in the media.
People seems to believe that if they can't come up with actual facts, then simply repeating a mantra over and again will somehow make it true...like "change" for instance.
To make substantiative changes at GM it takes BILLIONS of dollars....dollars they simple do not have due to current market conditions.
To make substantiative changes at GM it takes BILLIONS of dollars....dollars they simple do not have due to current market conditions.
Disciple
Joined: Aug 2003
Posts: 18
From: camaro land
I can't believe what I'm reading here........Let GM, Ford or Chrysler fail? Have you people lost your minds. Can you even understand the ramifications if this were to happen?
Let me ask you this. Do you like the roads plowed in the winter? How about your kids that go to school? Your grandparents medicare everything we take for granted would be affected. Don't believe me ask the people in Wyoming, MI.
This just from the tax money that GM pays the states in which it has a plant. Now add Ford and Chrysler into this.
Wake up everyone this will affect YOU in some way or another. Regardless of what you think this needs to happen and now.
Oh you can't forget the role in which all three auto man's have played in the Military.
GM, Ford and Chrysler have done so much for this country, now when they need us you just want to walk away.
I wonder what would have happened during WWI and WWII if they turned thier backs on us.
Let me ask you this. Do you like the roads plowed in the winter? How about your kids that go to school? Your grandparents medicare everything we take for granted would be affected. Don't believe me ask the people in Wyoming, MI.
This just from the tax money that GM pays the states in which it has a plant. Now add Ford and Chrysler into this.
Wake up everyone this will affect YOU in some way or another. Regardless of what you think this needs to happen and now.
Oh you can't forget the role in which all three auto man's have played in the Military.
GM, Ford and Chrysler have done so much for this country, now when they need us you just want to walk away.
I wonder what would have happened during WWI and WWII if they turned thier backs on us.
Registered User
Joined: Mar 2001
Posts: 954
From: Shelton, WA
Oh you can't forget the role in which all three auto man's have played in the Military.
GM, Ford and Chrysler have done so much for this country, now when they need us you just want to walk away.
I wonder what would have happened during WWI and WWII if they turned thier backs on us.
GM, Ford and Chrysler have done so much for this country, now when they need us you just want to walk away.
I wonder what would have happened during WWI and WWII if they turned thier backs on us.
American automakers wouldn't be in the predicament they're in right now if they weren't paying their assembly workers $70/hour while they're turning BILLION dollar losses every quarter for 4 YEARS STRAIGHT. I'm no financial genius, but that sounds like a classic recipe for disaster, and now they want us to pick up the tab. Brilliant!