GM in trouble

[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