The Carmagedonn Thread: FCA and "Consolidation"

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YSSMAN

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GM-Important-Change_01.jpg


...POOP...​

Well, it looks like GM is in far worse shape than they were telling us. Big time. This morning, GM reported a net loss of $2.5 BILLION, and consequently will be making some major cuts and sacrifices to attempt to keep afloat. From Autoblog:

Autoblog
Here's the bigger story: General Motors burned through $6.9 billion of its cash reserves during Q3 '08, which reduces its bank account from $21 billion at the end of Q2 to $16.2 billion today. That's barely enough for such a big automaker to survive the coming winter, so In response, GM has announced to create an additional $5 billion of liquidity by the end of 2009. Below are the big changes we can expect.

* Retiming select vehicle programs in North America and Europe by three to 12 months, i.e. lengthening product lifecycles
* Deferring capacity expansion projects
* Lower sales promotion spending, i.e. less advertising
* Less support of dealer network activities and channel consolidations
* Scaling back production
* Curtailing discretionary spending (travel, consulting, over-time, etc.)
* Increase reduction in force from 20 to 30%
Click to expand...

Jalopnik is reporting that AC-Delco and HUMMER are rolling around with "FOR SALE" signs in them, both of which have been rumored for some time. There is no word of what effect that will have on the rest of GM, but it seems fairly certain that we're heading up "S Creek" with an "S Paddle" while in a boat made completely of "S."

...great...

The only good news?

GM-CHRYSLER MERGER = DEAD (for now)

Volt Development is still on-schedule...
 
I predict that Volt will also be a big fail.

I say let someone buy them up and turn it around. Not our fault their management sucks.
 
Funny how there was no mention of any of the higher up's taking a pay cut in order to keep the company alive. That's pretty sad. Cut loose the people below us so we can stay fat. ugh!

I hope they can pull themselves together. I would hate to see GM go under.
 
Omnis
I predict that Volt will also be a big fail.

I say let someone buy them up and turn it around. Not our fault their management sucks.
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The thing is though, even if they decided to sell who would buy such a disaster?


Was going to write more, but thought better of it, shouldn't start speculation!
 
Man, GM is going down. I've heard Ford is also reporting major losses as well for third quarter.
 
GT4 genius
The thing is though, even if they decided to sell who would buy such a disaster?


Was going to write more, but thought better of it, shouldn't start speculation!
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Well, there could be some good candidates, but if stupid D.C. can't handle Budweiser being sold to Imbev and one of our ports being bought by Dubai, I can't imagine anyone with the cash being allowed to take over GM.

THEY CAINT TAKE 'ER SILVERADOES!
 
PARAGON GT
Funny how there was no mention of any of the higher up's taking a pay cut in order to keep the company alive. That's pretty sad. Cut loose the people below us so we can stay fat. ugh!

I hope they can pull themselves together. I would hate to see GM go under.
Click to expand...

Haven't GM execs taken pay cuts in the past? I would bet that they are intelligent enough to realize that pay cuts are going to be necessary.

Seeing GM go under would be sad indeed, especially here in Michigan where GM is a huge part of the economy, even being here on the other side of the state.

GT4 genius
The thing is though, even if they decided to sell who would buy such a disaster?
Click to expand...

Isn't the Volt something that GM has done right? At least that's what it has seemed like.

And yeah, Ford posted bigger losses for the past quarter. Although I would bet that they are still in better shape than GM.
 
Philly
Haven't GM execs taken pay cuts in the past? I would bet that they are intelligent enough to realize that pay cuts are going to be necessary.

Seeing GM go under would be sad indeed, especially here in Michigan where GM is a huge part of the economy, even being here on the other side of the state.
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I don't believe so. All I ever hear on the news is how they are laying off tradesmen and other workers. I have never caught anything about them taking a pay cut.

I from Michigan too. I don't live far from their tech center. I really hope that they pull through.
 
Omnis
I say let someone buy them up and turn it around. Not our fault their management sucks.
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I have absolutely no idea what kind of money would be involved, and in the end, I think thats the largest problem.

Who could buy 'em out?
  • Toyota (total global dominance, absolutely un-matched, knows how to set up tiered brands)
  • FIAT SpA (in an odd turn of events, FIAT could save GM, going for the R&D and massive market share)
  • Peugeot/Citroen (one of the most-profitable car companies in the world, they sit quietly on most things. Like FIAT, R&D and new marketshare could spell big wins)
  • Honda (less likely than Toyota, but still epic to upset the "hometown favorites"

The most-wild of all wildcards would be Volkswagen AG/Porsche or Ford sweeping in for something, but they seem like the most-unlikely candidates. With Hyundai reportedly wooing Chrysler now that GM is out of the picture, I'd count them out as well.

What would they be buying GM for?
  1. Market Share: GM is still the largest volume seller in the world, and with small adjustments, it can grow substantially
  2. R&D: Historically, GM engineers are some of the finest in the world, and you can bet your behind that there are some automakers who could buy them only for this department
  3. Engines & Transmissions: The small-block goes without saying, Ford co-developed all of their FWD/AWD gearboxes with GM a few years ago, and BMW has been using their units for years. Like R&D, this is a key factor
  4. Dealer Network: Need to get a brand off the ground or back in the North American market? GM has thousands of dealerships they'd like to introduce you to
  5. VOLT: Get a piece of it now, if GM can pull it off, it'll be HUGE

*key issues in bold and underlined

Its tough to say what a new owner would do in order to turn the boat around, but we've discussed what has to be done in order to make things right before. I mean, running a car company... How hard can it be?
 
YSSMAN
Ford sweeping in for something, but they seem like the most-unlikely candidates.
Click to expand...

: Shudder: Hate to see what that would look like, I mean FAIL + FAIL = ?

Should throw a little Dodgey in there too...
 
I wouldn't like to see Toyota buying GM... I'm opposed to the two largest automakers joining forces so both have to create the most vanilla cars.

Although it would be fascinating to see GM buy Chrysler and then Ford pick up GM.
 
V1P3R
: Shudder: Hate to see what that would look like, I mean FAIL + FAIL = ?
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I hate to say it, but Ford is in the best position to stay somewhat profitable while they continue to restructure. Fewer brands, dealerships, and a global effort that is otherwise even on most shores will make a global Ford that much easier to define. Given what they've discussed already for the American market, the only significant differences we'll have to the European and Asian markets will be the existence of the F-truck line, the Mustang, the Fusion/Mazda 6, and the Taurus/Volvo S60. Everything else will either be shared, streamlined, merged or outright disappear.
 
YSSMAN
I have absolutely no idea what kind of money would be involved, and in the end, I think thats the largest problem.
Click to expand...

Wouldn't be surprised if a Japanese company came in. I'm sure they would wait for the dollar to fall through before making a move, though. The yen is pretty sound because everyone saves in Japan and they have healthy exports. We don't.

Otherwise GM could likely be split up and sold off piece by piece. This could be something Chrysler could do too.
 
toyota have their own issues. lexus is making huge losses, and is bordering on failure as a brand at the moment, and toyota are loosing loads and loads of money. profit levels fell hugely. Also fiat arent in a position to buy now either, neither the peugeot and citroen group. they are all loosing too much money at the moment and all looking to cut back before even thinking about acquiring another huge loss making company.

I think car manufacturers have learnt from the past that takeovers and partnerships alot of the time dont work out.

bmw and rover for example. nearly ruined bmw. daimler chrysler. nearly ruined mb. infact mb are still feeling the aftermath. cerebus themselves want out at all costs also.

if ford and gm go bankrupt, cut off the non profiting assets, and just stick with the bits they actually make profit on, ie ford of europe, vauxhall/opel, they can rebuild over the years and become strong again over time.
 
Omnis
Wouldn't be surprised if a Japanese company came in. I'm sure they would wait for the dollar to fall through before making a move, though.
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It seems to be the most-likely move if GM is not federalized, and I can only see Toyota or Honda making the move. Toyota, in theory, would have the most to gain, and given their awkwardly lukewarm relationship they've had over the years, God only knows if it could happen.

RE: Forza, Focus on Profitability

You're on the right track, but that does not guarantee success. Keep in mind that the American brands are selling cars and trucks, the problem is, the costs involved to get them into the hands of the owner have cut the profitability to fractions of what it should be to make ends meet. Getting rid of the SUVs is a no-brainer, but GM/Ford/Chrysler has to address their UAW labor problem before they get to making anything work right.

If I were at the head of GM, I'd be issuing an ultimatum: The UAW needs to back off, we need to cut wages, or GM will get new employees. Benefits need to be slashed heavily, brought back to a realistic point, and a larger amount of the healthcare costs need to be shifted to the worker. Product lines have to be slashed, cars built severely limited (creating demand, reduced supply), and everything shifted to an international model of sale.
 
Strikes me that GM is ripe for a venture capitalist buy out. There seems to be a lot of fat that can be cut if you make swingeing cuts to the product set. In the US, there are heaps of brands, which sell "differentiator" cars, not in sufficient volume to justify the marginal costs.

Saab should be hived off as soon as possible, and could probably be killed entirely, since they haven't made a decent market competitive car in 5 years.

The Vauxhall brand could go in the UK: rebranding to Opel would cost a lot in the short term, but could save overall, especially in differential production costs.

But if you align workers to factories and factories to brands before rationalising the brand set, it allows you to cut out vast quantities of capital and operating costs at once, which should then (allowing for vast exceptional costs in the first year) allow a leaner, more profitable, operating model going forward.
 
YSSMAN
I hate to say it, but Ford is in the best position to stay somewhat profitable while they continue to restructure. Fewer brands, dealerships, and a global effort that is otherwise even on most shores will make a global Ford that much easier to define. Given what they've discussed already for the American market, the only significant differences we'll have to the European and Asian markets will be the existence of the F-truck line, the Mustang, the Fusion/Mazda 6, and the Taurus/Volvo S60. Everything else will either be shared, streamlined, merged or outright disappear.
Click to expand...

I forgot about Mazda being under Ford, it's the only part of Ford that's probably not a FAIL.

Jim Prower
I have a feeling that MB did more to ruin Chrysler than Chrysler did to ruin MB.
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Umm yeah, this... MB didn't get ruined. :rolleyes:
 
forza2.0
daimler chrysler. nearly ruined mb. infact mb are still feeling the aftermath.
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That is quite an interesting way to phrase Mercedes Benz buying and then completely running Chrysler into the ground.
I'll wait for Duke to see this. Then the fun will begin.

V1P3R
MB didn't get ruined.
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That's not particularly true. Mercedes Benz is currently in shambles depending on what area of the company you look at. However, it is entirely the result of Mercedes themselves deciding that the moronic ideas that they employed while destroying Chrysler would for some reason work with Mercedes itself.
 
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V1P3R
I forgot about Mazda being under Ford, it's the only part of Ford that's probably not a FAIL.
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And Volvo. My parents were looking at cars a few months ago and found the Volvo S60 to be very nice. I always thought Volvos were boring, and the fact that they made boxes on wheels for 20 years didn't help, but, they're awesome now. Sound of Turbo Inline 5 = WIN. And it's faster than my brother's Audi A4.

I'll admit the Volvo SUVs are pointless though.
 
Grand Prix
And Volvo. My parents were looking at cars a few months ago and found the Volvo S60 to be very nice. I always thought Volvos were boring, and the fact that they made boxes on wheels for 20 years didn't help, but, they're awesome now. Sound of Turbo Inline 5 = WIN. And it's faster than my brother's Audi A4.

I'll admit the Volvo SUVs are pointless though.
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its volvos suv that is keeping it alive.
 
forza2.0
its volvos suv that is keeping it alive.
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Source?

J/K, but even if the XC90 is keeping them alive now, it won't in the near future when gas soars up again. I think Volvo's biggest problem is that many people still have that image of a heavy and slow 240 wagon in their brains when they think of the company.
 
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I think GM and Ford's biggest problem is the UAW and the upper management. The companies are terribly top-heavy. There's way too much money and privileges being paid to not-so-high people, and the UAW is sucking the life's blood from these companies. There are multi-millions of people being directly and indirectly employed by GM and Ford when you factor in all their supplier. I know for a fact, because of my workplace's dealings, that many of them are GM-only suppliers. If that company goes down they all go down. My company in particular does work for Allison Transmission and DMAX, off the top of my head, along with other GM-related stuff. Thankfully we also do a ton of work for Honda's Anna, Ohio plant. Which is getting expanded, I might add, because of Honda's fine management, fair treatment of employees, and lack of the Union burden.

Also, I think the Volt is going to be huge. Too bad they're going to lose money on the deal. That car is gonna sell like hot cakes, especially if they advertise it right.
 
Keef
I think GM and Ford's biggest problem is the UAW and the upper management.
Click to expand...

Nail and head there. Although Toyota has a questionable reputation with some of their labor practices, going without the UAW has been one of the best things they could have done. If GM can buck the UAW, lower labor costs, they can probably save themselves a fat chunk of cash every year... And to that end, make more money on every car and truck they sell (I believe its a $1200 average on what goes directly to the UAW on every sale).
 
Twelve-hundred dollars? What the hell for?

An employee of the Anna Honda plant was on the radio Friday talking about GM's problems and the differences between them and Honda. Honda's factory workers make about the same wages, have the same excellent health care (with good-health incentives that are huge pluses for the majority or workers), and have an adequate 30-year retirement pension plan. They're treated well and everyone does just fine--but there's no union. Which tells me you don't need a union.
 
Except Honda actually sells the cars they build. UAW or not, GM wouldn't exactly be selling cars either way. And you would bet that if the UAW was gone, those things that Honda gives their employees that the UAW gives others would probably go away, especially now with GM struggling so much.
 
Briggs Armstrong has a neat article on Mises.org about GM. Check it out:
If the government does bail out GM, it will not be the last time. Even if the government gives GM a check every week, there will come a time that no amount of government money will be enough to save them. What is the best solution? In a word… bankruptcy. By filing for bankruptcy protection, GM can escape from the death grip that the UAW has on the business.
Click to expand...

Full article here: http://mises.org/story/3202
 
The question is beginning to seep into the Political Science department here at school, but we're not reaching the stuff I'd like to get to in class. It seems as though most of us, no matter what our views are on economics, want the Government to keep out of GM. The problem is, while Bankruptcy is a terrible option, it is far better than say having the Chinese buy them (something I hadn't thought about), and to some extent the better option by comparison to my preferred method... Selling out to Toyota for the short-term.

Either way, if this ship goes down, my whole state is going with them. God help us all.
 

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