This doesn`t look great.
msnbc.com Video Player

 

Hopefully it works for them. Seems like remaking a company works, sometimes!

 

CNN had a crawl running yesterday that said GM is preparing to file for bankruptcy.

When I went to cnn.com to read about it...there was nothing there.

I later discovered the info came from Reuters.

 

Very interesting news video .

Being a cynic at heart, I'm always a bit hesitant to believe everything I hear or read from the media as their consistent approach toward all news items is to generally tweak the facts and present an extreme angle that they feel will garner the most readership or viewership...my experience anyways.

But there is no doubt that the auto industry is ill in North America, particularly GM and Chrysler and something needs to happen...an overhaul of GM is probably long overdue.

I think if GM and Chrysler go under...then the confidence of the North American consumer for any domestic...Chrysler, GM or....yes, unfortunately Ford will be wiped out.

I'm concerned and I maybe wrong but I feel that many consumers will feel that first Chrysler, then GM...it won't be long for Ford.

It's been my experience that many group all the domestics together and see the domestics as similar to each other and dissimilar and not as good as imports.

I don't see it this way at all...but I'm not the general public ...I'm a gearhead and don't read and regard some of the consumer magazines as my fount of all knowledge... which many of the general public do...indiscriminately.

If GM and Chrysler went under, I think it would erode confidence in the remaining domestic...Ford. Many of the general public, would be waiting for the proverbial other shoe (Ford) to drop .

Ford just a short while ago has been in the similar, difficult financial straits.

Many consumers may think that they will no longer 'take a chance' on any domestics...they may just go with the companies with the best financial history that they see and many will see it is Honda or Toyota...sad to say.

I've had ...for the great majority of the past 42 years...either Ford or GM domestics. Presently in my family we have 3 domestics...two cars and one truck...all either 2007 or 2008...bought new.

Ford, GM and Dodge make excellent products .

North Americans design, assemble good vehicles.

I also don't think it would be healthy to have just one domestic and no other domestics for sale...alive and well in N.A.

Also can you imagine the great numbers of unemployed people ...not just from the GM and Dodge factories...but the dealerships, the parts suppliers...the list goes on. Think of the welfare and unemployment benefits...etc...it would be significant.

I think of all the other businesses like retail stores, hotels, restaurants, etc....that would be affected if people were not able to afford their services...due to being unemployed , with scant hope for employment on the horizon.

So...I as a taxpayer support what the Canadian govt. has done to support GM and Chrysler...I know the US Govt. has done the same.

The Canadian federal govt...just yesterday followed the US feds and they will back up both Chrysler and GM new car warranties for those makes which are sold in Canada.

To a certain extent I see this as a global battle and we (US and Canada) as each others longest term and largest trading partners are on the same side...we are in a battle for economics vs the rest of the world and if GM and Chrysler go down for the count ...I dunno...it will not be good...to say the least.

 

Is that a unreliable source..?

 

Reuters is one of the largest (if not the largest) news organizations in the world and is based in Europe.

So...I'd say Reuters a very reliable source of info.

It's no secret that GM has been teetering on the brink of bankruptcy for months.

If GM hadn't gotten the bailout money Bush doled out, they would be in Chapter 11 now. Didn't GM also get a few billion Loonies from y'all?

If GM goes bankrupt, you can kiss all that bailout money good bye.

The fact that GM, the largest automaker in the world, who once OWNED 70% of the market, could go bankrupt...is mindboggling!

However, GM will not go out of business.

Buick, Pontiac, Hummer and Saturn are DEAD anyway you look at them, and will be either sold off (if buyers can be found) or dropped all together by the bankruptcy court.

GM has already put SAAB into Sweden's bankruptcy court.

Adam Opel AG is very close to folding the tent. The German Gov't has refused to give Opel (which GM has owned since 1931), one Euro of bailout money.

GM has had Opel & Hummer on the block for months. So far..no buyers have been found for either one.

This will leave Cadillac & Chevrolet, possible GMC Trucks as the only viable brands.

The UAW gets it in the shorts, because all their contracts will be canceled. GM's bloated dealer network will prolly be cut down by at least 40%.

btw: Saturn has NEVER made a cent of profit for GM.

 

Something to think about is that if this current trend continues, all the auto manufactures lose sales, how many of the non North American auto companies will be closer to bankruptcy as well. Anyone have any facts on this?

 

what i wonder is how the foreign companies are ran to begin with?? are they privately owned, or government subsudized from the get-go? i don't know, i'm just asking the question?

 

I dont know how they are run either, but it seems as they arent in such trouble as the domestics right now.

Looking forward to Bills input on that though.

 

Just a few days ago I read the latest sales figures for all the major makes selling in North America. I can't find the article...but all of them were down..sales wise...significantly...March, 2009, compared to March 2008...Japanese cars included as well as domestics.

The percentages ranged from a low of around 25 % to 42 % with the biggest percentage in the 30 something %.

I can't imagine dismal car sales will go on forever, although it could well be a long time, given the rising unemployment and those who are currently employed who are reluctant to buy a new vehicle...in case the company they work for goes down, or they lose their job in this recession.

But it will be a battle of attrition...watching which manufacturer may go down.

I think Number Dummy's observation is sobering when he wrote how GM at one time had about a 70 % marketing share...I'm not sure what it is now, last I heard was about 20 %.

That's a slide for sure...but when you think about it, if GM has a 20 % market share in the North American market share...that means they sell one in five cars sold.

But if each car makes little or no profit or if there is a loss attributed to each car (I'm not sure what the deal is)...then that would be why they are getting killed.

As mentioned by others before...it's a lot to do with all their fixed costs...like pensions, health care, etc. If they go to bankruptcy court...I don't know enough about the American legal system if bankruptcy would cut down these costs .

I can't imagine it would because there are a lot of retired GM employees who need this coverage. I dunno...don't have a clue how GM can rise above these fixed costs ...if they can't get a clean slate...I dunno how they can survive. I think Ford and Chrysler would be in a similar situation as GM. The imports don't face these costs to the degree that the domestics do..

We're talking about people who need money to live, who earned their pensions and benefits...I don't know what will happen ?

On the other hand if GM goes out of business...will there be any pension or benefits for retirees.....will they look at a cut back...in a recession...hard to say..

But I believe in many cases pension benefits are held in separate funds from the company....it's a complicated question and without facts...we are just speculating. It's a mess whichever way you look at it though.

 

In Russia, the Gov't pours billions of rubles into the auto industry every year to enable the companies to stay in business, so the employees can keep their jobs

There was a major news article just recently about the Lada.

One owner that was interviewed that had just bought one new, stated the heater didn't work (parts were missing), the AM radio (!) didn't play, the cars get up and go...got up and went!

The lead picture in the article showed Russkie assembly line "workers" sitting at a table PLAYING CHESS while the cars on the assembly line passed by!

AFAIK, there are no foreign automakers operating in the US that are privately owned.

However, 81.1% of ChryCo is privately owned, because Cerberus Capital Management LLC, a private equity firm, owns that percentage.

The other 19.9% is owned by....yup...you guessed it...Daimler AG (formerly Daimler/Chrysler), who retained that percentage when they sold ChryCo to Cerberus.

What this means fellow members is...that not only Cerberus, but Daimler received bailout money.

While GM still has about 20% of the domestic market, their sales volume had dropped considerably since 2005, as has Fords and especially ChryCo's.

There is a sales volume break even point. A certain number of vehicles have to be sold before the companies begin making profits.

Because Ford/GM/ChryCo have failed to reach their respected break even points in several years, more money is being paid out than is coming in.

For example, GM is burning thru 1.2 billion dollars a month!

Toyota recently received money from the Japanese Gov't and their long time prez stepped aside in shame. I wouldn't be surprised if he commits hari-kiri.

The Obama Administration has given ChryCo 30 days to merge with another automaker. If they do not, ChryCo will not get any more bailout money.

You can bet your bottom Loonie, that if ChryCo doesn't merge, they will be forced to file for bankruptcy = Chapter 7 bankruptcy that is.

Chapter 7 = the company will be dis-solved with bits and pieces bought up for peanuts by others...that is...if anyone wants any of it.

btw: Here in LA LA Land, the local Dodge dealers are advertising new 2009 Ram Crew Cabs that have an MSRP of 28K, for 16K. And you also get zero percent financing for 36 months.

The hemi Rams with an MSRP of 31K can be bought for 20K.

However, sales are miniscule because most peeps are fully aware that if they buy any ChryCo product...if the company fails, they will basically own an empty sack.

 

Very interesting Bill. I cant believe that part about workers in Russia! How they can get away with that is bizarre.

My sister works in accounting for a dodge dealer in Nipawin, I cant help but wonder what her position will be in 6 months there.

Also heres something I never have understood. Say I bought a truck from dodge, did the financing, and dodge went under, boom no more company. So who exactly do I have to pay the rest of my payments to? Anyone know how that works?
All Ive ever done for vehicles is either a bank loan, or cash(cheque) from my personal account.

 

The Dodge will most likely be financed thru GMAC ( }, which will not go away.

Cerberus owns a hugh chunk of ChryCo, and another huge chunk of GMAC (about 60%) which they acquired from GM several years ago.

Remember those so-called merger talks between Chrysler & GM?

Here's the real story:

Cerberus wants the rest of GMAC, offered to trade ChryCo to GM for their remaining share.

So...there was no such thing as a merger...per se.

 

I financed my truck through the Ford dealership I bought it from, the loan is from and the loan is from a Scotia Bank in Calgary.

 

What does that have to do with Dodge and their in-house financing arm of GMAC?

GM vehicles can also be financed thru GMAC, but Ford has no connection to GMAC at all, and never has.

GMAC = General Motors Acceptance Corporation, was once wholly owned by GM.

Today, Cerberus who owns 81.1% of ChryCo also owns 60% of GMAC. GM owns the other 40%.