GM in trouble

[tidus1203]

But I still believe anyone who survives this very difficult time will end up winners in the end. Everyone is affected, everyone! But these challenges are what separates the man from the boys!

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cars and light trucks sales:



inventory:




it doesnt matter if the big 3 automakers get bailed out

they are still screwed

the US economy is in deep sh*t

car sales are down to 1980s level

inventory is piling up

the automakers can "restructure" all they want

they can "innovate" all they want

they can go "green" and "efficient" all they want

they have no market

they have no economy

[redorange]

why not just bailout the one with the less problems like Ford. we have Ford and Mazda vehicles in the family, yun na lang sana para safe.

btw, sino ba may-ari ng dodge sa tatlo, i'm kinda eyeing the Dodge Nitro next year when the collapse happens. magmumura siguro ito car na ito

Because it wouldn't help anyone to save just one, you have to look at the bigger picture of the impact of losing just one of these companies. It's not just matter of a company closing but the impact on the government in taxes and having to support the people that become unemployed. In the Philippines it's not a problem for the government when companies close because they don't provide any unemployment benefits to those unemployed but in the US that is a factor that needs top be considered.

http://money.cnn.com/2008/12/12/news...ates/index.htm

Auto crisis roils state budgets nationwide
Already cash-strapped states would be hit hard by the collapse of even one of the Big 3. Sales taxes, income taxes would suffer, as unemployment and Medicaid costs rise

NEW YORK(CNNMoney.com) -- The Big Three automakers' troubles are wreaking havoc on state and local budgets far beyond the Rust Belt. And a collapse of even one of Detroit's car manufacturers would hit governments while they are down.

States and cities around the nation are already slashing budgets and services as the deepening economic downturn shrinks their coffers. To close their budget gaps, governments are cutting public health programs, reducing aid to public school and universities, and laying off workers.

Problems in the auto industry are only exacerbating this turmoil. Not only have nearly 800,000 people lost car-related jobs this year, accounting for 40% of the increase in unemployment, but auto sales are at a 26-year low and at least 660 dealerships have closed their doors.

This means state and local governments are collecting less in personal income taxes, corporate business taxes and sales taxes -- all critical to funding their operations. State tax revenue fell 2.6%, when adjusted for inflation, in the third quarter, according to preliminary figures from the Rockefeller Institute of Government.

"If we see a significant falloff in employment and a continued decline in auto sales, the states are really going to see it and feel it," said Scott Pattison, executive director of the National Association of State Budget Officers. "It just hits so many sources of revenue."

Collapse would hit states hard
Any additional weakening of the auto industry would further reduce government revenues, while increasing the amount the public sector has to lay out for unemployment benefits, welfare and Medicaid, experts said.

A 50% reduction in the Big Three's domestic operations, for instance, would result in 2.5 million people losing their jobs, according to the Center for Automotive Research. That would drain $20.5 billion in personal income taxes at the federal, state and local levels in 2009, while forcing the public sector to spend an additional $11.9 billion in benefits.

Every state would feel the impact. Even if only GM, the most troubled of the automakers, shut down, 914,000 jobs would be lost nationwide, according to the Economic Policy Institute. This includes people who work in the plants, in auto suppliers and in businesses that support the industry, such as nearby restaurants and shops.

Of course, Michigan, Indiana and Ohio would be among the hardest hit, losing 2.5%, 1.4% and 1.1% of each state's total employment, respectively, the institute found. But all would see some decline in jobs, with Alabama losing 1.1% of its state workforce and New Hampshire shedding 0.6%.

"When people lose their jobs, it has a disproportionate effect on the tax base because these are good jobs with good wages," said Robert E. Scott, senior international economist at the Economic Policy Institute. "The demand for services goes up, while tax revenue goes down. It's a real recipe for disaster for state and local governments."

The slowdown in consumer demand for cars is also putting a crimp in state budgets. Americans bought 37% fewer cars in November than they did a year earlier, government figures show.

Though precise figures are difficult to come by, this big-ticket item accounts for about 12% to 15% of sales tax revenues in many states, estimates the Center on Budget and Policy Priorities.

Alabama, for one, has seen a 10.6% decline in sales taxes from car purchases for fiscal year 2008, which ended Sept. 30, according to state officials. Gov. Bob Riley is expected next week to announce how he will close a looming budget deficit, which the Center for Budget and Policy Priorities estimates is at $458 million, or 5.5% of the general fund.

Already suffering
Many states are already on the edge, experts say. At least 43 states are contending with budget shortfalls this year or next, according to the Center on Budget and Policy Priorities. They are the largest seen since the 2001 recession.

Soaring joblessness is also causing states to run out of money in their unemployment trust funds. The trust funds of five states are insolvent - meaning they have reserves of three months or less - while another eight state funds are nearly insolvent with reserves of four to six months, according to an October report from the National Employment Law Project. Six other states don't have enough money to cover a year of payments.

That's why governors, mayor and other state and local officials have been pressuring President-elect Barack Obama to quickly pass a stimulus package once he takes office in January. They are looking for money for infrastructure projects, Medicaid and food stamp programs, among other items.

More than half the states have already cut spending, drained reserves or raised taxes and fees to balance their budget. But at least 37 states, plus the District of Columbia, have seen new gaps open that total $31.2 billion, or 7.2% of their budgets, the Center on Budget and Policy Priorities said.

The cuts often come from public services, according to the center. Rhode Island, for instance, has eliminated health coverage for 1,000 low-income parents, while New Jersey has trimmed funds for charity care in hospitals. Florida has frozen reimbursements to nursing homes and relaxes staffing standards, while Massachusetts is reducing funding for some early care programs. Kentucky is eliminating 10% of its public defender positions, while Colorado has instituted hiring freezes.

Michigan, of course, has suffered greatly from the troubles in the auto industry. Just this week, the state budget director announced that general fund revenues are expected to fall $540 million below May estimates.

"It's a very dire situation for local governments in Michigan," said Donald Grimes, senior research specialist at the University of Michigan.

Michigan Gov. Jennifer Granholm plans to shave $134 million from the budget, which would involve slashing policy and program funding by $40 million and making $10 million in administrative cuts.

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Update:

WSJ
December 18, 2008
GM and Chrysler Reopen Talks on a Merger

General Motors Corp. and Chrysler LLC have reopened merger talks, as Chrysler owner Cerberus Capital Management LP has signaled its willingness to give away part of its ownership in the auto maker, say people familiar with the discussions.

With cash running low at both companies, Cerberus took the initiative to restart discussions that sputtered just weeks ago. At that time, both GM and Chrysler viewed a business combination as impractical and as a distraction from their mounting liquidity problems.

[tidus1203]

Two wrongs don't make one right! Joining forces won't help their problems of funding and not being able to sell cars, there should be someone stronger who should take over.

[AG4]

Two wrongs don't make one right!

Not unless the two companies merge and reduce their models/output to that of a single company.
When/If they start to look healthier, maybe some company (Chinese?) might want to help them out.

[uls]

hehe

someone stronger?

ummm...

US GOVT.



other automakers (Japanese, Korean, European) all have their own problems...

so it's not likely anyone of them is in the mood to buy an American automaker

Maybe the dollar-rich Chinese state-owned car manufacturers can...

but knowing how proud the Americans are, they wouldnt let foreigners take over their iconic companies

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Chrysler, Ford Idle Plants; GM Halts Engine Factory
http://www.bloomberg.com/apps/news?p...FQQ&refer=news

Dec. 17 (Bloomberg) -- Chrysler LLC, awaiting a federal rescue as its cash dwindles, will shut all 30 of its plants for at least a month starting Dec. 19 as unsold cars and trucks pile up at showrooms.

Ford Motor Co. said it will idle most of its North American assembly plants for the first week of January, while General Motors Corp. said a new factory making engines for the Chevrolet Volt electric car is being delayed to conserve cash.

The cutbacks showed how far automakers are going to save money and prune output in a year in which industrywide U.S. sales are poised to fall to their lowest levels since 1991. GM and Chrysler say they may run out of operating funds in just weeks without emergency U.S. aid.

[uls]

mejo OT coz not about GM

pero about automaker bailout...

UK naman

UK government says it's considering auto bailout
http://www.google.com/hostednews/ap/...EzTcQD954MUE00

LONDON (AP) — The British government is in talks with Jaguar Land Rover about a possible government bailout, a senior official said Wednesday.

Business Secretary Peter Mandelson said the government was in talks with Jaguar Land Rover's owners "because they argue that they are under particular strain." But he added that the government had yet to commit to providing them with any assistance. Government intervention would depend in large part on the severity of the downturn in the automotive market, he said.

"If we judge that it's not just short-term difficulties, but longer-term pressures that are operating in that sector or in relation to that particular company, then we will consider what measure — what intervention — we can appropriately make," Mandelson told Sky News television.

But he warned that the government did not have "an open checkbook" and said it was the responsibility of Indian conglomerate Tata Motors Ltd. — which acquired the Jaguar and Land Rover brands in June — to provide the cash to keep its subsidiaries alive.

The worldwide financial meltdown has hit the automotive sector particularly hard and already pushed the America's big three automakers to the brink of bankruptcy.

In Britain, Jaguar Land Rover is one of several car industry groups reported to be asking for taxpayer money to help them survive the crunch. Others have already collapsed under the strain. Last week British car parts maker Wagon PLC filed for a form of bankruptcy after failing to persuade key shareholders to commit to an emergency refinancing package.

Meanwhile car maker Vauxhall, a subsidiary of General Motors Corp., has doubled the length of its Christmas vacation to a month to cope with slackening demand.

Mandelson the government would monitor the auto sector to see whether "it's appropriate for the government to take any action or impossible for us to do so."

[tidus1203]

Is there still a British auto industry? Kala ko patay na... Jaguar should ask Tata for money and not the British tax payer...