GM in trouble

[redorange]

Now that banks have tightened credit, only the most credit worthy borrowers get loans (very high FICO score)

that's only a small fraction of consumers

I don't believe that most buyers don't qualify it's more of that they are not buying at the moment because of the uncertain economy. BTW it's not just the big 3 struggling with sales it also the foreign brands. Toyota has Toyotathon offering cashback or low interest, Nissan has 0% interest, Honda has 1.9-3.9%, Mazda has 0% interest, and those are the same things being offered by the big 3 but there are still no buyers for these cars. A lot of the people I know have credit ratings that would qualify but they just refuse to make any big ticket purchases with the current economy. Although I do have 2 co-workers that just bought 3 cars between them in one week.
Would it help if people spent their money? Sure. But who wants to spend money when you are not sure how bad things will get before it gets better.

To say that the big 3 have fallen because they depended on consumers who use credit to buy cars is inaccurate because all the car makers in the US depend on credit to make any sales. Even if someone had the money to pay cash they don't because you can get a very low interest loan, take the money put it in a CD and get interest higher than the loan, pay off that loan later and make money in the end. Did they lose sales because cars were not fuel efficient? Yes and No. Up until price of gas went up to $4-$5 that wasn't an issue with the US car buyer as a matter of fact those small cars didn't sell very well. Before the gas prices all the US buyer wanted was a good quality car and unfortunately the big 3 didn't do much of that unless you bought a full size truck. Did the buyers care that the truck only got 15mpg at most? No. Since gas prices have come down they may go back to that thinking because the small fuel efficient cars are not something that fits the driving landscape of this country. Who wants to drive across the state in a small car? Heck, I bet if the Philippines roads were wider, had freeways, gas was cheap, and cars more affordable most Pinoys would rather have a big gas guzzler to drive around rather than a 800cc Alto or 1.3L Avanza(nothing against those cars). Comments being made in this forum about Americans finally paying for their waste and disregard of fuel and the environment is ridiculous. Because most everyone would have done the same thing given the same situation. Just look at all the Pinoys who come to this country and buy those big engined gas guzzlers.

[uls]

I don't believe that most buyers don't qualify it's more of that they are not buying at the moment because of the uncertain economy. BTW it's not just the big 3 struggling with sales it also the foreign brands. Toyota has Toyotathon offering cashback or low interest, Nissan has 0% interest, Honda has 1.9-3.9%, Mazda has 0% interest, and those are the same things being offered by the big 3 but there are still no buyers for these cars. A lot of the people I know have credit ratings that would qualify but they just refuse to make any big ticket purchases with the current economy. Although I do have 2 co-workers that just bought 3 cars between them in one week.
Would it help if people spent their money? Sure. But who wants to spend money when you are not sure how bad things will get before it gets better.

To say that the big 3 have fallen because they depended on consumers who use credit to buy cars is inaccurate because all the car makers in the US depend on credit to make any sales. Even if someone had the money to pay cash they don't because you can get a very low interest loan, take the money put it in a CD and get interest higher than the loan, pay off that loan later and make money in the end. Did they lose sales because cars were not fuel efficient? Yes and No. Up until price of gas went up to $4-$5 that wasn't an issue with the US car buyer as a matter of fact those small cars didn't sell very well. Before the gas prices all the US buyer wanted was a good quality car and unfortunately the big 3 didn't do much of that unless you bought a full size truck. Did the buyers care that the truck only got 15mpg at most? No. Since gas prices have come down they may go back to that thinking because the small fuel efficient cars are not something that fits the driving landscape of this country. Who wants to drive across the state in a small car? Heck, I bet if the Philippines roads were wider, had freeways, gas was cheap, and cars more affordable most Pinoys would rather have a big gas guzzler to drive around rather than a 800cc Alto or 1.3L Avanza(nothing against those cars). Comments being made in this forum about Americans finally paying for their waste and disregard of fuel and the environment is ridiculous. Because most everyone would have done the same thing given the same situation. Just look at all the Pinoys who come to this country and buy those big engined gas guzzlers.

i wasnt only talking about the big 3

i know all carmakers are affected

i posted a chart above showing that

[redorange]

Reality check for the industry. I think the big, expensive, gas guzzling cars are now gone. From now on small, inexpensive is the way to go. Cars that people can really afford and don't have to go into debt just to get it.

Just how cheap do you think these cars are so that people don't need to go into debt for their purchase? Because the Fit will not leave a dealership for less than $15K, Yaris at least $14K, Versa maybe $12K, Aveo $13K, Accent about $12K, Focus $17K, and Caliber $17K. People will not pay cash for that amount and will still be in debt if they buy these cars. Alto, Picanto, Getz maybe? Nope not sold here. Smart car a nice small car fuel efficient and safe right? Well right now it starts at $11,995 and good luck finding a dealer to sell it at that price because there is a waiting list and prices are higher. BTW drive that on the freeway and see if your life doesn't flash before your eyes as a big rig passes by at 75mph/120km/h. Diesel engined cars? Well, only a few have managed to pass the smog laws of California which apparently a lot of states are now copying and those get more stringent every year and since diesel is more expensive people don't want to buy it also. BTW(don't know if you're even old enough to know this) everybody thought that big gas guzzling cars were done in the 70's but when gas prices came down they came back and now everybody thinks they will be gone again and when prices come down they'll be back again.

[Burai]

*AG4 and redorange
masyado niyo namang hinusgahan post ko na ok lang magsara GM... what i mean there was sige magsara na kasi kung naprepredict na nilang malulugi na sila, better stop it than having debts pa na palaki ng palaki in the days to come. pero still, that's my fault for not explaining things why
gusto ko lang ipoint out na parang sa statement ni uls yung sagot kong ok na magclose sila.

working in a company that gives employees a lot of benefits is great

but u have to look at how much it costs the company and how profitable the company is

GM is still living in its glory days

oo number 1 ang GM dati

kaya GM can afford to provide above-industry-standard employee benefits

pero GM's market share has been declining for decades

and it is still providing the same above-industry-standard benefits to its employees

How the hell can GM afford that?

it's not sustainable

i understand din kasi sa news na nabasa ko sa yahoo na "they're just extending the unevitable" something like that yung statement by someone i think from the congress. natauhan lang ako dun kaya naaalala ko yung quote niyang yun just don't get me wrong na ayaw ko sa mga US automakers

[Camgen6]

I don't think the U.S. government will let the big three shut down. These are American Icons. Malaki ang pride ng America just to let the Japanese, Koreans, Germans and Chinese cars running on America's freeways lol.

Wow I just read it on BBC news...

"The chief executives of Ford and GM have even offered to work for $1 a year if Congress approves the emergency aid".

Pag nagkataon mas malaki pa ang suweldo natin sa kanila.

* Redorange, tama ka I've seen those small vehicles (called Fit for Two) on freeways, I'd rather spend extra money for gasoline than to be inside those cars on freeway. I've first seen those in Italy never would I have imagined that they will make it here in the U.S.

[Gen. Miting]

Reality check for the industry. I think the big, expensive, gas guzzling cars are now gone. From now on small, inexpensive is the way to go. Cars that people can really afford and don't have to go into debt just to get it.

in the mid 50's, dumadami yun suv like big cars na parang taxi sa UK ngaun. nagkarun ng crisis sa oil turn of decade, bumalik tao sa smaller cars

in the mid 70's, dumadami yun suv na meron wood sa gilid saka yun mga ginagamit ng Texas Rangers na Ford Bronco, come 80's balik mini-cars and timing ang japanese cars

ngaun mag-turn ulit ang decade, to 2010, the people of the world will again dispose of the big cars and settle for smaller ones

history always repeats itself. generation gap talaga.

[AG4]

* Redorange, tama ka I've seen those small vehicles (called Fit for Two) on freeways, I'd rather spend extra money for gasoline than to be inside those cars on freeway. I've first seen those in Italy never would I have imagined that they will make it here in the U.S.

Are you talking about the Smart ForTwo?


Update:
Nardelli: Chrysler needs $4 billion now, willing to merge with GM

The CEOs of Chrysler LLC and General Motors Corp. said they would look at a forced merger if it were a condition of government financial assistance.

The merger talk and admission from Chrysler CEO Robert Nardelli and GM CEO Rick Wagoner that they might not survive without immediate financial aid overshadowed Nardelli's testimony that Chrysler needs $4 billion to get through March 31, and that it would begin repaying its proposed $7 billion loan in 2012.

http://www.detnews.com/apps/pbcs.dll...62/1148/AUTO01

[Camgen6]

Are you talking about the Smart ForTwo?


Update:
Nardelli: Chrysler needs $4 billion now, willing to merge with GM


http://www.detnews.com/apps/pbcs.dll...62/1148/AUTO01

AG4, smart for two pala tawag not fit for two, yeah yan nga.

[kinyo]

Now that oil price has lowered, don't automakers expect surge in sales anytime soon?

[uls]

^^
nope. the problem isnt oil price

the problem is tight credit

and consumers minimizing spending coz of bad economy

many people have lost their jobs

and those who still have a job, they don't know for sure if or when they will lose their job

not exactly a good time to buy a car

[AG4]

Now that oil price has lowered, don't automakers expect surge in sales anytime soon?

A bit...
Ford (the healthiest of the big 3) increased production of their new F150 to meet increased demand.

Update: Members of the Congress and President Bush agreed to give a portion of the loan package ($15 billion), without this GM and Chrysler might not make it past the end of the month.


To be continued when President-elect Barack Obama and the new Congress is in office...

[tidus1203]

Bottomline even if gas prices are down (we also have to remember what is the cause of the falling gas prices and that is falling demand rather than increasing supply) if you just lost your job, or fearing that you might lose your job, or fearing that your business is slowing down buying a car is just not an option at the moment. Rich people might still buy cars but they are not a majority. Most people buy cars only if economic conditions are favorable.

[uls]

http://wot.motortrend.com/6369725/au...and/index.html

Still, Ford spokeswoman Angie Kozleski said that the company doesn't expect sales to return to their previous levels. Ford sold 473,933 F-150s through November this year, barely more than half of the 939,463 trucks sold in 2004, the model's best year.

--

lower fuel price could encourage people to buy trucks and SUVs again...

but...

GM spokesman John McDonald explains that fuel is cheap right now because of economic uncertainty, but in the long run the automaker is planning for "higher fuel prices, not lower." Nissan and Toyota say they have no plans to change their current strategies, either.

So if gas prices continue to fall, will American drivers flock back to large SUVs as quickly as they abandoned them? Ford still thinks a sales rebound is at least 12 to 18 months away, and pickups and haulers won't really regain popularity until the housing market improves. As for why the vehicles are experiencing a sudden (if mild) increase in popularity, one Toyota spokesman thinks it's simply that "the buying public often has a short memory." And if gas prices head back up soon, some drivers could wind up stuck with big gas guzzlers that they can no longer trade in -- yet again.

http://wot.motortrend.com/6321295/in...und/index.html

[AG4]

i'm really counting on GM and Chrysler not to be bailed out pero mukang nakalusot pa before Obama takes over

the thing is dapat talaga bumagsak para matauhan sila.

I know its easy to say that when you are not the one affected, but over 3 million people in the US alone will lose their jobs if this happens, a few more million would lose their jobs from the regional plants around the world. Thats how serious this is, this is the reason why its not easy to say let them go down so they will learn.

if chevy and chrysler go down, magsasara lang naman sila for a time. and their factories idle.

If GM and Chrysler go down, this will cause a chain reaction and bring the auto parts suppliers down with them (put them out of business). Other manufacturers that rely on the same parts suppliers/vendors will have to stop production too.

80% of the parts suppliers of GM and Chrysler also supply to Ford.
Over 50% of these parts suppliers also supply to Asian carmakers in the US.

This is also one of the reasons why Toyota and Honda support the bailout.

Dalton McGuinty says when he met with the five automakers last week, representatives from Honda and Toyota were supportive of government efforts to stabilize General Motors, Ford and Chrysler.

McGuinty says both Japanese automakers are worried that the collapse of one of the Big Three will produce "supplier shock."

He says they fear companies who supply parts to the Big Three would not be able to sustain themselves if one failed.

http://www.wheels.ca/article/473081

[tidus1203]

But on the other side of the fence think about it, maybe they are just buying time with the bailout. So if they get bailed out but their business is still a sinking ship then they just wasted taxpayers money (which should have gone to more useful endeavors) and eventually job losses will still happen... So the question for me really boils down to this. Will the bailout buy significant amount of time to make the car companies radically change their business, if not might as well take the pain now and save the taxpayers because in the end its still the same they are just delaying it. Now if it really makes a difference (which I doubt, this is why I am against the bailout) then its all ok...

[mhanz794]

I'm also not in favor of a bailout. I think there is a greater risk that they will collapse soon so what's the logic of prolonging the agony. In my opinion, i would rather see them collapse now to be able to restructure the management and to formulate a new business model with a long term vision.

Perhaps, the rescue package being asked by the 3 CEOs will just be used to pay for their own retirement soon....then goodbye to all

[tidus1203]

Also the job losses might be painful but it has to happen. There is oversupply of dealers, oversupply of employees, oversupply of car salesman which does not match the demand side of the equation. Demand has significantly dropped, no one is buying cars, somethings wrong there as far as I can see it. If the reason they want to bail them out is because they want to protect the jobs rather than because they believe there is a viable and profitable future for GM then they have just transferred taxpayer money to a welfare state to the jobless so to speak. Socialistic economics like that has proven to fail in the long run as demonstrated by North Korea, Cuba, and the former Soviet Union satellites.

[ChevyChaser]

Given all the pros and cons stated in this forum by various entities, both pros and cons have the same merits.

A melt down of the US auto industry will not only be disastrous to American lives but will also affect everybody else in the world.

Additional to the long list of slowdowns in car sales are the German auto makers who, in a way, are also tied up with the US big 3.

Then again, a bailout of the big three could lead to abuse by the people running the industry AND encourage them to just produce the same products as they had before the global financial crisis. That means, there will not be any improvements on the vehicles they produce.

I still prefer Big American cars over small Asian or European cars because of the comfort. As i have pointed out before in another forum, I am a big person ( * 212lbs/96.36kgs ) and would rather drive in comfort than be in a car where I feel like I was stuffed inside a coffin, irregardless of consumption. This is why my wife and I have arguments when it comes to buying our next car. She wants a TOYOTA ALTIS, I want a bigger car. This is what 60% of the American Driving public want. Comfort as against consumption, which dictates the industry.

As far as I'm concerned, the real culprit here is the way people live their lives in the US. I have seen, people out there depend too much on credit. I have seen people go to WALMART, buy a bottle or 2 of soda and pay by means of credit cards. The whole US economy is so dependent on Credit that now, the whole system is cash strapped the weight of this failure is bearing down on them. The consuming public does not have the means to consume. NO CASH, NO CREDIT, NO SELL.

Now, it's going the other way round. WHY WOULD I SPEND $27k ON A TRUCK WHEN I CAN SPEND HALF OF THAT ON A SMALL, IMPORTED, CHEAP CAR AND STILL HAVE SOMETHING LEFT TO LIVE ON.

It doesn't matter whether you live in the US or here in the Philippines or anywhere in the world.

The US auto industry is in trouble because people don't want to buy because they haven't got the credit because they haven't got the cash. Even if the big 3 or any other corporation produces fuel efficient cars ( even if they can come up with a car that runs on tap water ) for as long as the buying public cannot buy, they will still go down.

During the DEPRESSION YEARS of the 1920s, people in the US couldn't afford luxuries such as Coca-cola because they couldn't afford it. In those days, a bottle of Coke was only 5 US cents.

The players in the US Auto Industry ( as well as the Banking Industry) should re-structure their game plans and strategies so as to bring back the buying publics confidence in them.

Make cars that are not only fuel efficient, but also comfortable, of HIGH QUALITY and CHEAPER.

[AG4]

I'm also not in favor of a bailout. I think there is a greater risk that they will collapse soon so what's the logic of prolonging the agony. In my opinion, i would rather see them collapse now to be able to restructure the management and to formulate a new business model with a long term vision.

Sadly its not an isolated case, people don't look at the big picture.
You think if you let GM collapse, they will be the only car maker who will be affected? Its a ripple effect.

What links many of the car makers in the US (domestic or foreign) together are the parts suppliers and vendors which cater to different manufacturers. Kill their biggest customer and they'll probably go bankrupt.

For example, if GM collapses they will drag down other domestic companies and the US divisions of foreign carmakers.

This is the reason why foreign car makers like Toyota and Honda support the bailout, they too will be affected even if its not direct.

[uls]

the US economy is screwed

the banks are insolvent

consumers are in debt, lost their income or are about to lose their income

that's the big picture

the big 3 automakers are just 3 of thousands and thousands of US companies on the edge of the cliff

it just so happens they get more media coverage than others