Just heard today that Buick and/or Pontiac is on GM's chopping block.

I am sure other people in here own and operate a business or are privy to the complete financial statements of companies. If you are, there is one thing that is true. The labor cost is at least and most of the time 60 to 70% of operating expenses. I know my company runs at 63% of operating costs. The company I am with is a not profit organization. With UAW and the like the american worker makes many times over what any chinese worker makes. Unions are great and protect the american worker very well. As the labor cost go up, and not just payroll but healthcare, pensions, insurance and payroll taxes, the american automaker does not absorb that cost. That cost is relayed in the MSRP to the consumer. China being communist and a dictatorship to boot. Those companies have to take core of ony ONE......EL PRESIDENTE. China is going to be a very formitable rival to the U.S. very shortly. They are very close now. We have to be very careful in how weak our Dollar gets to thier Yen. Just look at thier demand in the past few years on the crude oil market. The U.S. is the world 1# cosumer of oil but China is now a close 2#. We make a HUGE deal in this country about conservation in factories, automobiles, and such. China has ZERO conservation guidlines. They will use more oil and do far less with it than the U.S. It is very worrysome to see where we are headed. Chrysler went through this. We all know Ford's financial problems. Now GM is getting the boom dropped on it. It is really hard to say what the answer is. But downsizing would help. Ford dropped the redundancy in For and Lincoln products. GM will have to do the same.

When I was a Gm buyer, I had a uncle that was the chief financial guy at a large Ford dealership. We were talking one day about the current demographic of the auto industry. He was saying some things that really surprised me. This conversation happened about 4 years ago. He said that the American sutomaker break even at best passanger cars. He emphasized "at best" Japan can produce a vehicle and sell it cheaper that any of the big 3. To compete the big three had to sell at break even to stay in the market. The thing that was keeping detroit alive was the booming SUV market (dont forget about 4 years ago he told me this) and light trucks. He said ALL profits for the big 3 were in thsi market. SUV's prices rose and rose. And they sold and sold. It was not uncommon for those vehcile to get a 4-7% MSRP increase every year compared to 3% on most cars. As the price of fuel rises you can see the toll taken. Down 30 40% in the past few months, in sales. The light trucks were the same way. There was a feeling that people in this market would tend to stay american made for obvious reasons. These buyers always sided on this side of the Atlantic.

Now that the market demographic has changed with Japan having very good entries into the market. Especially when the Japanese were allowed to bring a V8 to the market. The pressures on the U.S. automaker industry has never been higher. The compitition can do it cheaper and faster and sell it for less.

Ever look for a used Maxima or Camry? There are outrageous. 5 years old with 50K miles on them still selling for $20K. I looked at a 2002 Caddy STS for a friend of mine. It had 19K miles. It was a very clean car. At the President's day sale time, it was lessing for $22k. About 1/2 price of a 2005 caddy STS ($49k). The maxima at $20k five years old with double the miles of the caddy was 2/3 price of band new.

Tells you something about quality. Like the earlier post about # of recalls between ford and toyota.

 

I've just been used car shopping and bought one on e-bay. I finally bought a Town Car but also shopped for a V6 Accord and V6 Camry. Even though the Town Car stickered for twice as much as the Honda and Toyota, I could buy it cheaper and the EPA rating was only 2 MPG better on the Toyota and 4 MPG better on the Honda and it is much more enjoyable. I didn't consider a Cadillac because of potential engine problems. Some warranty companies have a $500 surcharge on the warranty for Cadillacs with the Northstar engine and I figure there must be a reason.

 

It most certainly did - right here in Florida on my truck radio. Really shocked me to hear Isuzu call GMC junk and "Grade F". This is the only reason I even asked if GM and Isuzu were still affiliated.

 

I hope GM gets there act together and make some tough descisions to get there financial affairs in order. As Ive said as the Big 3 goes so goes the country. The pysche off the country would be wounded pretty badly with failure off any off the Big 3. The economic impact would be tremendous. We americans are pretty proud that we can produce a product that we can drive that is made by Americans with American ideas. We on here like to poke fun at Chevy and Dodge. But really without the competition there is no striving for a better product. Competition is necessary in our economic system.

 

"General Motors has a market value of about $16 billion. It owes its bondholders seven times as much, with debts of more than $115 billion. Pension liabilities and health-care costs are crippling the company at a time when its market share is collapsing -- the kind of car crash that U.S. bankruptcy law is designed to avert. "

I think that right there shows just how bad their position is. Even if they declare they are bankrupt, what will happen to all that debt they owe? Wont that kill the companies that they owe it too or what?

Something smells and I think its GM.

 

theshyguy"General Motors has a market value of about $16 billion. It owes its bondholders seven times as much, with debts of more than $115 billion. Pension liabilities and health-care costs are crippling the company at a time when its market share is collapsing -- the kind of car crash that U.S. bankruptcy law is designed to avert. "

I think that right there shows just how bad their position is. Even if they declare they are bankrupt, what will happen to all that debt they owe? Wont that kill the companies that they owe it too or what?

Something smells and I think its GM.

There ya go- the issue here isn't whether GM will fail as a company or not, but in what form and structure that it. If they went chapter 11:

1) The shareholders of GM stock would take the biggest hit. This would include a disproportionate number of GM employees, since historically folks tend to own their company stock in their 401's (always a bad idea, but there ya go)

2) The bondholders will become the new owners of the company. Amounts and repayment would be renegotiated, to be sure- but they'll own what's left.

3) Existing union contracts would be out the window, healthcare plans and pensions would be at risk. The government insures those pensions, but not at full amount. the Airline people actually collected anywhere from 25- 50 cents on the dollar.

If you think back on (Texaco, K-mart come to mind) Chapter 11 is a great way to get the courts to do what couldn't be done at a negotiation table. Sooo...LT, the real risk is to the few million GM employees and retirees.

 

Speaking of bailing out California, it does seem everyone has to do it. I'm in British Columbia, Canada, and we are still waiting to be paid back on hundreds of millions of dollars in energy bills.

This is a very interesting thread, I never thought I'd see the day. I'm a hardcore Ford man, but GM is a very important competitor, and is essential to the auto market. Ford needs to have big competition to keep them going as well as they have been.

There seems to be this huge idea that the Japanese are taking over, and the world is coming to an end. It just isnt goin to happen. Trucks like the Titan and a would-be "truck" called the Rideline prove my statement. The Titan doesnt look like a truck, and has yet to be proven, although I think it will do alright. The Ridgeline missed the target all together. Trucks are not the whole market, but so many times Ive come on here and read about "buying American" and keeping business in the country, so I can't see this massive wave of people buying the foriegn vehicles at all.

 

While this is more in line with the original post I just read where Ford is going to invest 934 million more dollars into Jaguar. I guess if GM goes in for chapter 11 then Ford will not be far behind. I don't understand pumping that much money into a brand when you probably won't get the benefits you want.

 

True Ford would not be far behind, but not because they are in trouble but because they would be put at a market disadvantage. Ford itself is not in the best of times but financially they are a little better then GM of course the analysts do state that if it didn't have FORD on the name the company would already be in chapter 11. Their stocks are just a little above those of GM. On the bright side though Ford is setting with about 26 billion in cash right now and things are starting to turn around.

 

True Ford would not be far behind, but not because they are in trouble but because they would be put at a market disadvantage. Ford itself is not in the best of times but financially they are a little better then GM of course the analysts do state that if it didn't have FORD on the name the company would already be in chapter 11. Their stocks are just a little above those of GM. On the bright side though Ford is setting with about 26 billion in cash right now and things are starting to turn around.

It's all relative- GM's got $55 Billion in cash and another $20 Billion in short-term recievables. GM stock closed at $29.30 on Thursday, Ford at $11.29. Total market Cap (what the companies are worth) GM: $280 Billion, Ford $170 billion.

To put this all in perspective, Toyota's market Cap is $183 Billion, and they show $21 Billion in cash, with another $47 billion in short term recievables.

 

EXCELLENT post polarbear. I've been wanting some info like that. I appreciate it.

 

If it comes to hunting down financials or charts- just ask. I eat and breathe this stuff.

 

Toyoda's going to build a super duty type truck. I know this, because they sent a team of engineers out to my brothers work place, and spent a week driving, crawling under, and photographing his bosses fleet of Ford superduty 4 x4 trucks. They wanted to know what everbody liked about them, what they didn't like, and how we everyday joes would have done it. I don't think the Detriot companies particularly GM would have done something like that. It's going to be a ton 4x4 with a diesel. Who's market share will the new Toyoda steal? It won't hurt the PSD or Dodge Cummins market share that much IMO, but it's a oncoming diasaster for the D-Max.

GM just didn't recently get too big. It's been huge for generations. It's been the worlds largest corp since the 1920's. Under Alfred P Sloan, GM had a brand and a product for every consumer demographic. Each GM brand filled a demographic niche in the market. But it wasn't a global economy in those days. Back then, GM filled the niches that are now filled by foreign competition. Today the demographic niches that GM once owned have been replaced largely by Japanese brands. It's a different world now, and GM is the one that hasn't figured out to remake it's self.

GM has been making junk and simply rebranding it for so long now, that their brand names have come to have no meaning. Under Sloan, each GM brand was mostly it's own, with it's own in-house design and engineering teams. Each division could call up the whole corporation's resourses though, to produce a slightly superior product for less cost. Bodies were by Fisher. That all changed in the 70's, and it wasn't for the best. Prior to the 70's, Buicks didn't use cheap chevy motors, and pontiac wasn't just a rebranded corporate chevy whith plastic cladding. Cadillacs have had abysmal reliablity for decades now, and people don't consider them to be anywhere close to the same leauge as Mercedes Benz or Lexus, in either build quality, or performance. People don't buy a BMW because of typical GM gimmicks like gaudy styling, avalanches, aztecs, G6 sun roofs, huge bars across the grill, on-star, or quadra steer, insta-trac or the (well the list of cheesy GM gimicks are endless arn't they). It's because a BMW is a well executed example of solid engineering and classic design concepts. You can also buy a 3 series BMW for less money than a GM D-Max pickup truck. Now that's ridiculas! A gimick is not an inovative design concept. GM can't produce a product of equal quality for an equal price either. They have too much overhead I guess. Just go car shopping and price GM's products vs their competions in the same market segment. People will not pay slightly more for an slightly inferior product, forever. After awhile people get wiser, and they have. Times up GM. People will pay more for quality though. GM is way behind the curve in quality design. Their designs look dated, because they are.

 

P51D Mustang- I think those statements, and thinking, are dated. GM's surpassed all the domestics and most of the Europeans in quality in the last five years, and that is documented. As a manufacturer, GM is 4th overall, behind Toyota, Honda, and Porsche. If you can document otherwise, I'd love to see it.

 

Interesting you mention that polarbear...
I am surprised Porsche is #3.

Ever sat in a Cayenne (sp?) lately?
I think the quality is attrocious for a thing costing so much...
Its no better than the standard of a (approx US $27000) Ford Falcon.

While I appreciate these "ratings", it does give a reasonable indication about where an auto manufacturer is quality wise, I judge the quality of a vehicle by sitting in it and driving in it, looking for squeaks and rattles, panel gaps etc.